American Dream Team, Inc. v. Citizens State Bank

ACCEPTED
12-14-00117-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
11/2/2015 3:10:02 PM
Pam Estes
CLERK

NO. 12-14-00117-CV FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
11/2/2015 3:10:02 PM
IN THE COURT OF APPEALS PAM ESTES
FOR THE TWELFTH DISTRICT OF TEXAS Clerk
AT TYLER, TEXAS

AMERICAN DREAM TEAM, INC.,
Appellant,

v.

CITIZENS STATE BANK,
Appellee.

On Appeal from the 173rd District Court
Henderson, County, Texas
Cause No. 2012-0912
(Hon. Dan Moore)

APPELLANT’S MOTION FOR REHEARING

Respectfully Submitted,
COOPER & SCULLY, P.C. ATTORNEY AT LAW
DIANA L. FAUST JOHN EMMETT
diana.faust@cooperscully.com john-emmett@att.net
Texas Bar No. 00793717 Texas Bar No. 06610000
MICHELLE E. ROBBERSON
michelle.robberson@cooperscully.com
Texas Bar No. 16982900

900 Jackson Street, Suite 100 12339 Brittany Circle
Dallas, Texas 75202 Dallas, Texas 75230
(214) 712-9500 (972) 851-9904
(214) 712-9540 (fax) (972) 851-9905 (fax)
ATTORNEYS FOR APPELLANT
 TABLE OF CONTENTS
Page

TABLE OF CONTENTS........................................................................................ i

TABLE OF AUTHORITIES ................................................................................. ii

I. STATEMENT OF THE ISSUES ON REHEARING .................................. vi

II. INTRODUCTION ........................................................................................1

III. ARGUMENT ...............................................................................................1

A. Standards of Review Favor Nonmovant ADT.....................................1

B. ADT Raised Genuine Issues of Material Fact on Challenged
Elements of Common-Law Fraud .......................................................3

1. Fact Issue: Whether CSB Made a Misrepresentation................3

a. Payne’s Testimony Regarding Teller McDougald...........4

b. Blaase’s Testimony Regarding Teller Hill ......................5

2. Fact Issue: Whether Tellers’ Statements Were Made
Recklessly and Without Knowledge of the Truth......................6

3. Fact Issue: Whether ADT Justifiably Relied on the
Misrepresentation .....................................................................9

a. Improper Burden...........................................................10

b. Improper Factfinding ....................................................11

c. Improper Analysis ........................................................14

C. Alternatively, Trial Court Abused its Discretion in Striking
ADT’s Evidence ...............................................................................15

CERTIFICATE OF COMPLIANCE ....................................................................21

CERTIFICATE OF SERVICE..............................................................................21

i
 TABLE OF AUTHORITIES

Cases Page(s)

Am. Dream Team, Inc. v. Citizens St. Bank,
No. 12-14-00117-CV, 2015 WL 5439686
(Tex. App.—Tyler, Sept. 16, 2015, no pet. h.) .................. 1, 3, 7, 8, 9, 10, 14, 15

Amedisys, Inc. v. Kingwood Home Health Care, L.L.C.,
437 S.W.3d 507 (Tex. 2014) .............................................................................. 1

Anderson v. Liberty Lobby, Inc.,
477 U.S. 242 (1986)........................................................................................2, 3

Bank of Tex., N.A. v. Glenny,
405 S.W.3d 310 (Tex. App.–Dallas 2013, no pet.)......................................11, 13

Barraza v. Eureka Co.,
25 S.W.3d 225 (Tex. App.—El Paso 2000, pet. denied)..............................15, 16

Blake v. Intco Invs. of Tex., Inc.,
123 S.W.3d 521 (Tex. App.–San Antonio 2003, no pet.) ................................. 17

Buchanan v. Davis,
15 S.W.2d 562 (Tex. Comm'n App. 1929, judgm't aff'd) ................................... 8

Cantey Hanger, L.L.P. v. Byrd,
467 S.W.3d 477 (Tex. 2015) ...........................................................................2, 7

Chau v. Riddle,
254 S.W.3d 453 (Tex. 2008) .............................................................................. 2

Field v. Mans,
516 U.S. 59 (1995)......................................................................................11, 14

Ford Motor Co. v. Ridgway,
135 S.W.3d 598 (Tex. 2004) .............................................................................. 1

Gallegos v. Johnson,
No. 13-07-00603-CV, 2010 WL 672934
(Tex. App.—Corpus Christi, Feb. 25, 2010, no pet.)........................................ 16

ii
Geosearch, Inc. v. Howell Petroleum Corp.,
819 F.2d 521 (5th Cir. 1987)............................................................................ 11

Gotham Ins. Co. v. Warren E&P, Inc.,
455 S.W.3d 558 (Tex. 2014) .............................................................................. 2

Grant Thornton L.L.P. v. Prospect High Income Fund,
314 S.W.3d 913 (Tex. 2010) .......................................................................11, 12

Guthrie v. Suiter,
934 S.W.2d 820 (Tex. App.–Houston [1st Dist.] 1996, no writ)....................... 17

Hamilton v. Wilson,
249 S.W.3d 425 (Tex. 2008) ...................................................................2, 10, 15

Hinojosa v. Columbia/St. David’s Healthcare Sys., L.P.,
106 S.W.3d 380 (Tex. App.—Austin 2003, no pet.)......................................... 16

Moss v. Littleton,
No. 3:01-CV-2260-L, 2002 WL 31156405 (N.D. Tex., Sept. 26, 2002)........... 11

Mumphord v. First Victoria Nat'l Bank,
605 S.W.2d 701 (Tex. Civ. App.–Corpus Christi 1980, no writ) ........................ 8

Neely v. Wilson,
418 S.W.3d 52 (Tex. 2013).............................................................................1, 2

Orca Assets, G.P. v. JPMorgan Chase Bank,
No. 05-13-01700-CV, 2015 WL 4736786
(Tex. App.—Dallas, Aug. 11, 2015, pet. filed) (mem. op.) .........................11, 13

Orion Ref. Corp. v. UOP,
259 S.W.3d 749 (Tex. App.–Houston [1st Dist.] 2007, pet. denied).................... 8

Prize Energy Resources, L.P. v. Cliff Hoskins, Inc.,
345 S.W.3d 537 (Tex. App.—San Antonio 2011, no pet.) ............................... 11

Ramirez v. Colonial Freight Warehouse Co.,
434 S.W.3d 244 (Tex. App.–Houston [1st Dist.] 2014, pet. denied).............16, 17

Rogers v. Ricane Enterprises, Inc.,
772 S.W.2d 76 (Tex. 1989).............................................................................. 16

iii
Tex. Dep't of Pub. Safety v. Rolfe,
986 S.W.2d 823 (Tex. App.—Austin 1999, no pet.)........................................... 9

Tex. Prudential Ins. Co. v. Padgett,
120 S.W.2d 927 (Tex. Civ. App.—Waco 1938, no writ).................................... 9

Rules Page(s)

TEX. R. APP. P. 49.9 .............................................................................................. vi

iv
 NO. 12-14-00117-CV

IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS
AT TYLER, TEXAS

AMERICAN DREAM TEAM, INC.,
Appellant,

v.

CITIZENS STATE BANK,
Appellee.

On Appeal from the 173rd District Court
Henderson, County, Texas
Cause No. 2012-0912
(Hon. Dan Moore)

APPELLANT’S MOTION FOR REHEARING

TO THE HONORABLE JUSTICES
OF THE TWELFTH COURT OF APPEALS:

Appellant American Dream Team, Inc. (“ADT” or “Appellant”) respectfully

moves this Court for rehearing, pursuant to rule 49.1 of the Texas Rules of

Appellate Procedure, and urges this Court to reconsider its Opinion affirming the

trial court’s Final Summary Judgment in favor of Appellee Citizens State Bank

(“CSB” or “Appellee”). In support of its Motion, Appellant respectfully represents

as follows:

v
 I. STATEMENT OF THE ISSUES ON REHEARING

Without waiving its right to seek review by the Texas Supreme Court1 of

any or all issues presented on appeal, ADT respectfully presents the following

issues for this Court’s consideration on rehearing:

1. Respectfully, this Court failed to apply or misapplied the standards of

review applicable to summary judgments that favor the nonmovant (here, ADT).

In its Opinion, the Court appeared to disregard some or all of ADT’s summary

judgment evidence and to impose burdens on ADT contrary to the law, rather than

taking ADT’s evidence as true and indulging all reasonable inferences and

resolving all doubts in ADT’s favor. Applying the proper burdens and standards of

review to the summary judgment evidence relating to ADT’s claim for common-

law fraud, the Court should have concluded that ADT raised genuine issues of

material fact on each of the challenged elements of its claim. Therefore, the

summary judgment on the fraud claim should be reversed and the claim remanded

for a jury trial.

2. Alternatively, the Court erred in concluding that the trial court did not

abuse its discretion in striking ADT’s summary judgment evidence on grounds it

was voluminous or that ADT did not specifically reference it in its responses to

CSB’s motions for summary judgment. Under Texas law, ADT provided

1
See TEX. R. APP. P. 49.9.

vi
sufficient references to its summary judgment evidence, the evidence was not

voluminous under prevailing standards, and all the evidence was relevant to ADT’s

response to CSB’s motion for summary judgment, which addressed all claims

asserted by ADT. To the extent the Court upholds its prior ruling that ADT’s

(non-excluded) evidence did not raise fact issues on fraud, then the striking of

ADT’s other deposition evidence resulted in harmful error; if that evidence had

been considered, it would have raised fact issues on the challenged elements. If

the Court is inclined to uphold its ruling that ADT’s non-excluded evidence did not

raise fact issues on fraud, the Court should reverse the trial court’s ruling on the

striking of ADT’s evidence and should consider ADT’s additional evidence in

ruling on this Motion as to the fraud claim.

vii
 II. INTRODUCTION

In this appeal from a final summary judgment on all of ADT’s claims and

CSB’s counterclaim, this Court issued its Opinion on September 16, 2015,

affirming the summary judgment on all grounds. Am. Dream Team, Inc. v.

Citizens St. Bank, No. 12-14-00117-CV, 2015 WL 5439686 (Tex. App.—Tyler,

Sept. 16, 2015, no pet. h.) (not yet reported). Here, ADT challenges this Court’s

rulings on its claim for common-law fraud and, if necessary, the trial court’s

striking of ADT’s evidence. ADT respectfully requests the Court reconsider its

Opinion, grant rehearing, and, upon reconsideration, reverse the summary

judgment on the common-law fraud claim and remand it for trial.

III. ARGUMENT

A. Standards of Review Favor Nonmovant ADT

Although the Court discussed the summary judgment burdens and standards

of review in its Opinion, it did not appear to apply those, at least based on the

discussion in the Opinion. ADT’s only burden as the nonmovant was to present

summary judgment evidence raising a fact issue on at least one element of the

claim (traditional) or on the challenged elements (no-evidence). E.g., Amedisys,

Inc. v. Kingwood Home Health Care, L.L.C., 437 S.W.3d 507, 511 (Tex. 2014)

(traditional); Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004) (no-

evidence). A fact issue exists if the record contains more than a scintilla of

probative evidence. Neely v. Wilson, 418 S.W.3d 52, 59 (Tex. 2013).

APPELLANT’S MOTION FOR REHEARING PAGE 1
 In deciding whether the nonmovant produced more than a scintilla of

evidence, this Court must review the summary judgment record “in the light most

favorable to the nonmovant, indulging every reasonable inference and resolving

any doubts against the motion.” Id. at 60. This Court must take as true all

evidence favorable to the nonmovant. E.g., Cantey Hanger, L.L.P. v. Byrd, 467

S.W.3d 477, 481 (Tex. 2015). “Credibility determinations, the weighing of the

evidence, and the drawing of legitimate inferences from the facts are jury

functions, not those of a judge.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

255 (1986).

The Texas Supreme Court has reversed summary judgments when a court of

appeals failed to properly apply the standards of review. E.g., Gotham Ins. Co. v.

Warren E&P, Inc., 455 S.W.3d 558, 568 (Tex. 2014) (court of appeals erred in

relying solely on testimony it deemed “unequivocal”; court failed to consider other

testimony in record, which raised fact issue); Chau v. Riddle, 254 S.W.3d 453,

455-56 (Tex. 2008) (per curiam) (court of appeals erred in ignoring plaintiff’s

summary judgment evidence, which raised fact issue on defendant’s affirmative

defense); Hamilton v. Wilson, 249 S.W.3d 425, 426-27 (Tex. 2008) (plaintiff “was

not required to prove the facts as she alleged them”; plaintiff required only to

provide evidence raising genuine fact issues). Respectfully, in its Opinion, this

Court misapplied or failed to apply some of these rules.

APPELLANT’S MOTION FOR REHEARING PAGE 2
 B. ADT Raised Genuine Issues of Material Fact on Challenged
Elements of Common-Law Fraud

CSB challenged three elements of ADT’s common-law fraud: CSB did not

make a misrepresentation; if CSB did, it did not do so with knowledge or

recklessly, as a positive assertion, without knowledge of the truth; and ADT did

not justifiably rely on the misrepresentation. (CR.4:519-22, 530-31).

Respectfully, contrary to this Court’s Opinion, the summary judgment evidence

presented genuine issues of material fact on these elements, which precluded

summary judgment for CSB. “[T]he plaintiff, to survive the defendant’s motion,

need only present evidence from which a jury might return a verdict in his favor. If

he does so, there is a genuine issue of fact that requires a trial.” Anderson, 477

U.S. at 257 (emphasis added).

1. Fact Issue: Whether CSB Made a Misrepresentation

In its Opinion, this Court ruled that statements by the two bank tellers who

responded to ADT’s inquiries about whether the check had cleared were not false

and, thus, were not misrepresentations. American Dream, 2015 WL 5439686 at

*6-7. This Court quoted summary judgment evidence consisting of statements

from one teller, who said “the funds were there,” referring to the provisional credit

given to ADT pending collection on the international check. Id. at *6. But, the

Court failed to discuss other summary judgment evidence relating to ADT’s

question to the tellers of whether the “check had cleared” – meaning the

APPELLANT’S MOTION FOR REHEARING PAGE 3
international check itself, as opposed to whether “the funds were there” because of

a provisional credit. Here, whether the “check had cleared” is an entirely separate

question from whether “the funds were there,” and it is the core of ADT’s

common-law fraud claim. (See CR.3:273). A “yes” answer by the tellers to

ADT’s question about whether the “check had cleared,” when it undisputedly had

not cleared and never cleared, at least raised a fact question as to whether the

tellers’ “yes” answers were false statements and, thus, misrepresentations.

a. Payne’s Testimony Regarding Teller McDougald

In ADT President Janet Payne’s deposition, Payne testified that she spoke

with CSB President Leland Pitts about the check when she presented it for deposit

(around February 11, 2010). (CR.3:312-13). Pitts explained the international

check had to be sent for collection, and he had bank teller Heather McDougald

help Payne with the deposit. (CR.3:313). McDougald told Payne she would let

Payne know when the check cleared.2 (CR.3:312-13). Payne understood this

discussion to mean that CSB was going to make sure the check was good and

notify her when it was. (CR.3:315). Payne spoke to McDougald at least three

times after the initial deposit, inquiring whether the bank had heard anything about

2
McDougald testified that ADT Vice President Robert Blaase, rather than Payne, brought
in the check. (CR.3:426). Still, McDougald told Blaase she would call when the bank knew the
funds were available, which could take at least one month and possibly two months, and he said
“that was fine, to call him when it was cleared or when the funds became available, that we knew
the check was good.” (CR.2:161; 3:427).

APPELLANT’S MOTION FOR REHEARING PAGE 4
whether the check was good, and each time McDougald had said “no.”3

(CR.3:316).

In her affidavit, Payne testified that she was at the bank making deposits on

March 1, 2010, and she again asked McDougald “to check on the status of such

check to see if it had cleared.” (CR.3:298-99; see also CR.3:316). Payne stated

McDougald looked at her computer monitor and responded, “the funds were there

and it looks like they’re good.” (CR.3:299, 316, 324).

Taking this evidence as true, and resolving all doubts and inferences in favor

of ADT, the reasonable inference from this evidence was that McDougald knew

the check was an international check and knew ADT was waiting to do anything

with the funds until it had confirmation the check had cleared, not just

confirmation that the provisional credit was in the account. Accordingly,

McDougald’s answer that “the funds are there and it looks like they’re good,” in

response to the question whether the “check had cleared,” was a false answer. At

the least, the evidence raised a fact question as to whether McDougald’s answer

was false and, thus, a misrepresentation.

b. Blaase’s Testimony Regarding Teller Hill

ADT Vice President Robert Blaase testified that, when he went to the bank

on March 2, 2010, after Payne told him McDougald had stated the check had

3
Blaase testified he had made similar inquiries to Pitts during the same time period –
asking Pitts at least three to five times whether the check had cleared. (CR.2:148-49; CR.3:300).

APPELLANT’S MOTION FOR REHEARING PAGE 5
cleared (CR.3:301), he told teller Laura Hill he needed to wire money but said, “I

want to make sure that this check has cleared. We’ve been told that it has, Jan[et

Payne] had been told that it has.” (CR.2:147). Blaase testified that Hill looked at

her computer screen and, after 10-15 seconds, answered “yes” to his question.

(Id.). Viewing this evidence in the light most favorable to ADT, Hill’s “yes”

answer to Blaase’s inquiry whether the “check has cleared” was a false answer

because the check had not cleared and never cleared. At the least, this evidence

(taken as true and resolving any doubts in favor of ADT) raised a fact question as

to whether Hill’s answer was false and, thus, a misrepresentation.

Applying the summary judgment standards of review, particularly taking

ADT’s evidence as true, ADT raised a genuine issue of material fact as to whether

the bank tellers’ answers were false when made and, thus, misrepresentations.

Because a jury is entitled to decide this fact issue, the summary judgment must be

reversed and the fraud claim remanded for trial.

2. Fact Issue: Whether Tellers’ Statements Were Made
Recklessly and Without Knowledge of the Truth

On the second challenged element, whether the misrepresentation was

knowing or made recklessly, as a positive assertion, without knowledge of the

truth, this Court concluded that the bank tellers’ statements were: (a) just

“misunderstandings” that could not amount to fraud; and (b) ambiguous, which

would not “equate to knowing the representation was false or made without

APPELLANT’S MOTION FOR REHEARING PAGE 6
knowledge of its truth.” American Dream, 2015 WL 5439686 at *7. This Court

concluded “there is no evidence of this element of fraud in the record before us.”

Id.

Respectfully, applying the summary judgment standards of review, the

record did contain summary judgment evidence and did raise a genuine issue of

material fact as to whether the tellers’ misrepresentations were made recklessly, as

positive assertions, without knowledge of the truth. As the Court recognized in

this section of its Opinion, ADT’s Payne and Blaase asked the tellers whether the

international check had cleared. See id. This testimony must be taken as true.

Byrd, 467 S.W.3d at 481. As noted, ADT’s questions as to whether the check had

cleared were completely different from the question of whether, simply looking at

the computer screen, ADT’s account had funds in it. The evidence is undisputed

that both tellers merely looked at their computer screens, without doing any more

investigation into whether the check had cleared, and then answered “yes” and “the

funds are there” and “it looks like they’re good.” (CR.2:147; 3:299). As argued

above, these answers were false, and, at a minimum, this evidence raised a genuine

issue of material fact as to whether the bank tellers’ answers were made recklessly,

as positive assertions, and without knowledge of the truth.

APPELLANT’S MOTION FOR REHEARING PAGE 7
 Moreover, this Court’s statement – that “ADT’s president and vice president

interpreted the communication differently from the Bank’s employees”4 –

effectively resolves a fact question and, respectfully, makes the Court a factfinder,

contrary to Texas law. How ADT personnel and CSB personnel interpreted the

questions and the answers regarding whether the check had cleared, as well as

whether those interpretations were just a “misunderstanding” or were instead

reckless misrepresentations, are fact issues a jury should decide, not this Court on

appellate review.5

As to the Court’s conclusion that the bank tellers’ statements were

ambiguous and, thus, cannot be reckless misrepresentations,6 this conclusion also

impermissibly substituted this Court as a factfinder and resolved a factual dispute

that should instead be resolved by a jury. Under Texas law, when a witness’s

testimony is ambiguous, the meaning to be ascribed to the testimony is a question

for the jury or factfinder to decide. See, e.g., Buchanan v. Davis, 15 S.W.2d 562,

4
Id. at *7.
5
The cases the Court cites regarding “misunderstanding” are distinguishable. In Orion
Ref. Corp. v. UOP, 259 S.W.3d 749 (Tex. App.–Houston [1st Dist.] 2007, pet. denied), the
summary judgment record contained an email where the plaintiff admitted to a
misunderstanding. Id. at 771. The record here contains no such admission. In Mumphord v.
First Victoria Nat’l Bank, 605 S.W.2d 701 (Tex. Civ. App.–Corpus Christi 1980, no writ), the
appellate court held the plaintiff proved only a misunderstanding, rather than a
misrepresentation, when the plaintiff admitted that no one (either bank personnel or the trustee)
told her the foreclosure sale would be postponed. Id. at 704. The record here differs because it
contains affirmative statements from the tellers.
6
Id. at *7.

APPELLANT’S MOTION FOR REHEARING PAGE 8
562 (Tex. Comm’n App. 1929, judgm’t aff’d) (jury should decide); Tex. Dep’t of

Pub. Safety v. Rolfe, 986 S.W.2d 823, 826 (Tex. App.—Austin 1999, no pet.)

(administrative law judge should decide); Tex. Prudential Ins. Co. v. Padgett, 120

S.W.2d 927, 929 (Tex. Civ. App.—Waco 1938, no writ) (jury should decide).

Here, if the questions and answers were, in fact, ambiguous (which ADT does not

concede), then the meaning of the ambiguous testimony of Payne, Blaase, and the

tellers is a fact issue that a jury must decide.

Respectfully, if the Court had considered all of ADT’s summary judgment

evidence, and if the Court had applied the summary judgment standards of review

that favor ADT, the Court should have concluded that ADT’s evidence raised a

genuine issue of material fact on the reckless misrepresentation element. Because

a jury must resolve this fact issue, this Court should reverse the summary judgment

on the common-law fraud claim and remand it for trial.

3. Fact Issue: Whether ADT Justifiably Relied on the
Misrepresentation

On the third challenged element, whether ADT justifiably relied on the

misrepresentation, this Court appeared to conclude (without expressly stating) that,

as a matter of law, ADT’s reliance on the tellers’ representations that the check had

cleared was not justifiable. American Dream, 2015 WL 5439686 at *7-8. The

Court identified what it considered to be “red flags” regarding ADT’s foreign

transaction with Lopez and relied on those “red flags” to conclude that ADT could

APPELLANT’S MOTION FOR REHEARING PAGE 9
not have justifiably relied on the tellers’ representations that the check had cleared

and, thus, it was safe to send the $30,000 wire transfer. See id. The Court

appeared to consider some of ADT’s summary judgment evidence, but not all of it,

and the Court did not appear to apply the summary judgment standards of review

to it.

CSB did not conclusively establish a lack of justifiable reliance, as it spent

only one paragraph on this element in its traditional motion for summary judgment

and cited no evidence in support of its argument. (CR.4:522). In fact, CSB never

mentioned “red flags” in any of its summary judgment filings and never asked the

trial court to conclude, as a matter of law, that “red flags” negated justifiable

reliance. (CR.1:75-100; CR.4:445-48, 481-82, 505-32, 533-58).7

a. Improper Burden

Nonetheless, the Court’s Opinion on justifiable reliance raises several issues.

First, the Court held that “ADT failed to establish the justifiable reliance element

of its fraud cause of action.” American Dream, 2015 WL 5439686 at *8. Under

Texas law, it was not ADT’s burden to “establish” any element of its fraud claim.

Hamilton, 249 S.W.3d at 426-27. Rather, as the nonmovant, ADT’s only burden

was to present evidence raising a genuine issue of material fact on the reliance

7
ADT complained of CSB’s failure to plead and argue “red flags” in the trial court. (See
Reply Brief at 9-10).

APPELLANT’S MOTION FOR REHEARING PAGE 10
element. See TEX. R. APP. P. 166a(i). Respectfully, the Court erred by imposing

an improper burden on ADT.

b. Improper Factfinding

Second, the Court failed to apply the summary judgment standards of review

to the evidence in the record, and, instead, made its own determination of the

credibility of the witnesses, the weight to give their testimony, the weight to give

to the supposed “red flags,” and the ultimate issue – whether ADT’s reliance on the

tellers’ statements to the effect that the “check had cleared” was justifiable. Many

Texas courts recognize that whether reliance is justifiable in a fraud claim

generally is a fact question for the jury. E.g., Orca Assets, G.P. v. JPMorgan

Chase Bank, No. 05-13-01700-CV, 2015 WL 4736786 at *9 (Tex. App.—Dallas,

Aug. 11, 2015, pet. filed) (mem. op.); Bank of Tex., N.A. v. Glenny, 405 S.W.3d

310, 318 (Tex. App.–Dallas 2013, no pet.); Prize Energy Resources, L.P. v. Cliff

Hoskins, Inc., 345 S.W.3d 537, 585 (Tex. App.—San Antonio 2011, no pet.);

Geosearch, Inc. v. Howell Petroleum Corp., 819 F.2d 521, 527 (5th Cir. 1987)

(Texas law); Moss v. Littleton, No. 3:01-CV-2260-L, 2002 WL 31156405 at *2

(N.D. Tex., Sept. 26, 2002) (unpublished) (Texas law).

This stems, in part, from the inherently factual nature of the reliance inquiry,

which includes consideration of the qualities and characteristics of the particular

plaintiff and the circumstances of the particular case. E.g., Field v. Mans, 516 U.S.

59, 71 (1995). In the “red flags” case relied upon by the Court, Grant Thornton
APPELLANT’S MOTION FOR REHEARING PAGE 11
L.L.P. v. Prospect High Income Fund, 314 S.W.3d 913 (Tex. 2010), the Texas

Supreme Court stated that, “[i]n measuring justifiability, we must inquire whether,

given a fraud plaintiff’s individual characteristics, abilities, and appreciation of

facts and circumstances at or before the time of the alleged fraud, it is extremely

unlikely that there is actual reliance on the plaintiff’s part.” Id. at 923.

Unlike this case, however, Grant Thornton involved highly sophisticated

business entities (global accounting firm, bond funds and hedge funds, and global

lenders) with extensive experience in the bond market and billions in assets. Id. at

915-17. The supreme court rendered judgment for the accounting firm, concluding

the plaintiffs/investors could not have justifiably relied on the accounting firm’s

audit reports and other statements, given their undisputed knowledge that the bond

seller had lost its primary source of funding and that this loss created a substantial

risk that any bonds purchased would not be redeemed for face value. Id. at 923-24.

Here, on the other hand, the summary judgment evidence showed ADT was

not a highly sophisticated business with international clients and global banking

experience. Payne and Blaase both testified this was their first experience with a

check drawn on a foreign bank. (CR.3:298, 300). Pitts also had not been involved

with collection on a foreign bank’s check. (CR.2:175). ADT broker Trena Davis

testified this transaction was only her second deal with a foreign buyer.

(CR.2:190).

APPELLANT’S MOTION FOR REHEARING PAGE 12
 CSB executive vice president Rita Bristow confirmed that checks drawn on

foreign banks are governed by different rules. (CR.4:594). Bristow also testified

that the check itself did not raise a suspicion of fraud to her, prior to it being

returned. (CR.4:576-77).

Given their lack of experience, both Payne and Blaase contacted McDougald

and Pitts multiple times after presenting the check for deposit to determine whether

the check had cleared. (CR.2:148-49; 3:300, 316). The bank personnel knew that

ADT did not want to disburse any funds until it had confirmation the check had

cleared. (CR.2:161; 3:315, 427). Both Blaase and Davis testified they were

trusting and relying on the bank to tell them whether the check had cleared, and

Blaase told Pitts no withdrawals could be made from the account until that check

had cleared. (CR.2:200; 3:301). Payne and Blaase both testified they would not

have wired the funds if they had known the check had not cleared. (CR.3:301,

318).

Even considering the evidence of purported “red flags” listed in the Court’s

Opinion, this additional evidence must be taken as true and viewed in ADT’s

favor. Doing so, ADT raised a genuine issue of material fact regarding whether its

reliance on the tellers’ statements was justifiable, and that issue must be resolved

by a jury. See Orca, 2015 WL 4736786 at *9 (red flags and other evidence raised

fact issue); Glenny, 405 S.W.3d at 318 (evidence raised fact issue on reliance and

APPELLANT’S MOTION FOR REHEARING PAGE 13
no red flags negated reliance). Given the inexperience of the parties, this is not a

case where the evidence conclusively established that actual reliance was

“extremely unlikely.” Respectfully, the Court usurped the jury’s role when it

judged the impact of the purported “red flags,” determined ADT’s mindset and

alleged lack of diligence, discounted ADT’s evidence, and concluded as a matter

of law that reliance was not justified.

c. Improper Analysis

Third, the Court cited to the U.S. Supreme Court’s opinion in Field v. Mans

for the proposition that a “fraud plaintiff cannot recover if he blindly relies upon a

misrepresentation, the falsity of which would be patent to him if he had utilized his

opportunity to make a cursory examination or investigation.” American Dream,

2015 WL 5439686 at *8. However, that quote from Field continues to say that,

“[o]n the other hand, the rule stated in this Section applies only when the recipient

of the misrepresentation is capable of appreciating its falsity at the time by the use

of his senses.” Field, 516 U.S. at 71. Here, CSB was the only party with access to

the critical information (whether the check had cleared).

The Field court also recognized that, under the common law of fraud, while

the plaintiff’s reliance must be justifiable, that does not mean his conduct must

conform to a reasonable man standard – the justifiability of the reliance depends on

the facts of each case, not a community standard. Id. at 70-71. Therefore, even

under Field, whether the alleged “red flags” should have alerted ADT to a possible
APPELLANT’S MOTION FOR REHEARING PAGE 14
scam and, thus, whether its reliance on the tellers’ statements was justifiable, is a

fact question unique to this case that should be resolved by a jury. The Court

should, on rehearing, reverse the summary judgment on the fraud claim and

remand it for trial.

C. Alternatively, Trial Court Abused its Discretion in Striking
ADT’s Evidence

If this Court is inclined to uphold its conclusion that the above-discussed

evidence did not raise fact issues on fraud, this Court should reconsider its ruling

upholding the trial court’s striking of ADT’s summary judgment evidence,

consisting of deposition testimony from Payne, Blaase, Pitts, and McDougald that

ADT did not specifically cite in its responses. American Dream, 2015 WL

5439686 at *11. Respectfully, the trial court abused its discretion in striking the

depositions because they were not voluminous under prevailing law and were

highly relevant to ADT’s claims, given that CSB sought summary judgment on

ADT’s whole case. The striking was harmful because the struck evidence, if

considered, raised/supported fact issues on the fraud elements.

With a no-evidence motion, the nonmovant is “’not required to marshal its

proof; its response need only point out evidence that raises a fact issue on the

challenged elements.’” Hamilton, 249 S.W.3d at 426. Rule 166a(d) allows a

nonmovant to rely on depositions when it files them in an appendix (as here), and

its response clearly relies on the depositions (as here). Barraza v. Eureka Co., 25

APPELLANT’S MOTION FOR REHEARING PAGE 15
S.W.3d 225, 228-29 (Tex. App.—El Paso 2000, pet. denied). Rule 166a(d) does

not require specific references to the depositions, if the actual documents are

before the trial court, for the trial court to consider them. See id. at 228.

When the nonmovant attaches the evidence, provides specific references to

the evidence that particularly supports the argument (approximately 20), and the

evidence is not voluminous (278 pages or less), a trial court abuses its discretion in

striking the evidence. Id. at 229-30; Hinojosa v. Columbia/St. David’s Healthcare

Sys., L.P., 106 S.W.3d 380, 387-88 (Tex. App.—Austin 2003, no pet.) (nonmovant

need not set out exact evidence or explain with specificity how evidence supports

its arguments; evidence need only be referenced or attached for court to consider

it); see also Gallegos v. Johnson, No. 13-07-00603-CV, 2010 WL 672934 at *6-7

(Tex. App.—Corpus Christi, Feb. 25, 2010, no pet.) (185 condensed pages of

depositions was not voluminous, evidence was relevant to plaintiff’s responsive

arguments, and plaintiff referenced deposition testimony; thus, trial court erred in

not considering evidence).

Respectfully, the cases cited in the Opinion are distinguishable. This case

differs from Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76 (Tex. 1989),

because the MSJ there merely directed the trial court to the evidence “on file,”

which was voluminous, and the movant failed to show the trial court did or could

have considered the evidence. Id. at 81. In Ramirez v. Colonial Freight

APPELLANT’S MOTION FOR REHEARING PAGE 16
Warehouse Co., 434 S.W.3d 244 (Tex. App.–Houston [1st Dist.] 2014, pet. denied),

the appellate court held that the deposition was not voluminous (110 pages) and

that the plaintiff made sufficient references to the deposition, such that the trial

court erred in not considering it. Id. at 250-51. Blake v. Intco Invs. of Tex., Inc.,

123 S.W.3d 521 (Tex. App.–San Antonio 2003, no pet.), provides no precedent

here because the nonmovant there attached no evidence to her response; thus, the

trial court was not required to search the record for evidence supporting the

nonmovant’s contentions. Id. at 525. Guthrie v. Suiter, 934 S.W.2d 820 (Tex.

App.–Houston [1st Dist.] 1996, no writ), is distinguishable because the nonmovant

attached a voluminous (500 pages) deposition but provided no references to any of

the testimony. Id. at 826.8

Here, the depositions were not voluminous, compared to the cases discussed

above: excluding certifications and indices, the four depositions totaled 312 pages,

which were condensed to 81 pages. (CR.3:305-443). ADT cited to those pages of

the depositions that particularly supported its arguments (roughly 25), and

discussed how the testimony raised fact issues on the challenged elements.

(CR.3:273-96; 5:611-29). Applying rules 166a(d) and (i), Hamilton, Barraza,

Hinojosa, and Gallegos, the trial court abused its discretion in striking and refusing

8
The Guthrie court, however, did agree that rule 166a(d) permits a party to attach an entire
deposition as summary judgment proof. Id. at 826.

APPELLANT’S MOTION FOR REHEARING PAGE 17
to consider the uncited portions of ADT’s deposition evidence. The ruling should

be reversed and the additional evidence considered.

The additional deposition testimony would have raised/supported a fact issue

on falsity: Payne discussed when she was in the bank, asking McDougald about

whether the check had cleared and how she had been told it was good (CR.3:315;

323); Blaase discussed Payne telling him what McDougald told her (CR.3:349,

359, 366) and what Hill told him (CR.3:359); and Pitts discussed what Hill told

him, including that Blaase asked whether the Canadian check had cleared

(CR.3:397). The additional testimony would have raised/supported a fact issue on

reckless misrepresentation: Blaase discussed his conversation with Hill

(CR.3:359) and how he was told the check had cleared when it had not (CR.3:367).

And, the additional testimony would have raised/supported a fact issue on

justifiable reliance: Payne said her only concern about the transaction was the two

amounts on the check, and she trusted the bank to find out if the check was good

(CR.3:312, 316); Payne did not think the transaction was suspicious because ADT

always follows the client’s instructions (CR.3:324); this was Blaase’s first wire

transfer, and he wired the money based on the bank telling him it was okay to do

so (CR.3:349, 357, 367); and it was not unusual for ADT to accept money to

purchase things for its clients or to hold money in escrow prior to a contract being

signed (CR.3:352, 361). Thus, the trial court’s error in striking the deposition

APPELLANT’S MOTION FOR REHEARING PAGE 18
testimony was harmful and its ruling should be reversed, and this Court should

consider this additional evidence in deciding whether ADT raised fact issues on

fraud.

THEREFORE, Appellant respectfully prays this Court grant this Motion,

withdraw its Opinion, and upon reconsideration, reverse the Final Summary

Judgment on the common-law fraud claim and, if needed, the ruling striking

ADT’s evidence. Appellant prays for all further relief as this Court deems just.

APPELLANT’S MOTION FOR REHEARING PAGE 19
 Respectfully submitted,

COOPER & SCULLY, P.C.

By: /s/ Diana L. Faust
DIANA L. FAUST
diana.faust@cooperscully.com
Texas Bar No. 00793717
MICHELLE E. ROBBERSON
mchelle.robberson@cooperscully.com
Texas Bar No. 16982900

900 Jackson Street, Suite 100
Dallas, Texas 75202
Telephone: (214) 712-9500
Facsimile: (214) 712-9540

ATTORNEY AT LAW
JOHN EMMETT
john-emmett@att.net
Texas Bar No. 06610000
12339 Brittany Circle
Dallas, Texas 75230
Telephone: (972) 851-9904
Facsimile: (972) 851-9905

ATTORNEYS FOR APPELLANT
AMERICAN DREAM TEAM, INC.

APPELLANT’S MOTION FOR REHEARING PAGE 20
 CERTIFICATE OF COMPLIANCE

I hereby certify that we prepared this Motion for Rehearing using Microsoft

Word 2003, which indicated that the total word count (exclusive of those items

listed in rule 9.4(i)(1) of the Texas Rules of Appellate Procedure, as amended) is

4,479 words.

/s/ Diana L. Faust
DIANA L. FAUST

CERTIFICATE OF SERVICE

I hereby certify that I served a true and correct copy of this Motion for

Rehearing on the following counsel of record, on the 2nd day of November 2015,

by the method indicated:

Mr. Scott A. Ritcheson VIA EFILE
scottr@rllawfirm.net
Ritcheson, Lauffer & Vincent, P.C.
821 ESE Loop 323, Suite 530
Tyler, Texas 75701
Counsel for Appellee

/s/ Diana L. Faust
DIANA L. FAUST

APPELLANT’S MOTION FOR REHEARING PAGE 21
 NO. 12-14-00117-CV

IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS
AT TYLER, TEXAS

AMERICAN DREAM TEAM, INC.,
Appellant,

v.

CITIZENS STATE BANK,
Appellee.

On Appeal from the 173rd District Court
Henderson, County, Texas
Cause No. 2012-0912
(Hon. Dan Moore)

APPENDIX TO APPELLANT’S MOTION FOR REHEARING

In compliance with rule 38.1(k) of the Texas Rules of Appellate Procedure,

Appellant American Dream Team, Inc. submits this Appendix to its Motion for

Rehearing containing the following items:

Tab A: Judgment and Opinion, American Dream Team, Inc. v. Citizens
State Bank, No. 12-14-00117-CV, 2015 WL 5439686 (Tex.
App.—Tyler, Sept. 16, 2015, no pet. h.).
D/935443v4
APPENDIX TAB “A”
 NO. 12-14-00117-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

AMERICAN DREAM TEAM, INC., § APPEAL FROM THE 173RD
APPELLANT

V. § JUDICIAL DISTRICT COURT

CITIZENS STATE BANK,
APPELLEE § HENDERSON COUNTY, TEXAS

OPINION
American Dream Team, Inc. (ADT) filed suit against Citizens State Bank alleging the
Bank had improperly charged back $30,000.00 against its account for a provisional credit
extended on a counterfeit check. The trial court granted the Bank’s motion for traditional and no
evidence summary judgment, rendering a take nothing judgment on all of ADT’s claims, and
awarding attorney’s fees to the Bank. In six issues, ADT contends the trial court reversibly
erred. We affirm.
BACKGROUND
ADT is a real estate brokerage firm specializing in selling properties in the Cedar Creek
Lake area of Henderson County, Texas. On January 23, 2010, it received the following system
wide email sent by the marketer Point2 Real Estate:

23-Jan-2010

Prospect Email
You are receiving this email because Mr. Yang Hua Lopez has emailed you from your website.

Email: yanghl@informaticos.com

Dear Sir/Madam, I am Mr. Yang Hua Lopez currently the Chief Financial Officer (CFO)
Hangzhou Iron & Steel Group Company (HISGC) Website: http://www.hazsteel.com I am retiring
soon will be relocating to Texas for Good, after searching the Internet for a reliable real estate
agent I found your firm have decided to choose your firm to buy my permanent home. The home
 will be a cash buy and I will fly to your city for viewing the property but before that I would like
my stock broker in America to send the money to your firm via a lawyer/solicitor to keep in a trust
account upon arrival. I need a 4 bed rooms/5 bed room’s home of $300,000.00USD -
$1,200,000.00USD In nice neighborhood in your city and state. Email is better than telephone due
to my accent and english. Regards, Mr. Yang Hua Lopez Chief Financial Officer, Email;
yanghl@informaticos.com

Manage Prospect – Mr. Yang Hua Lopez

The following day, Trena Davis, a real estate agent with ADT, responded to Lopez by
email stating that she would be happy to assist him in his home search. Upon his request, she
sent him more than ten prospective properties meeting his stated requirements. Within an hour
and a half, Lopez chose what he described as his “dream home” in Lewisville, Texas, more than
eighty miles away from Cedar Creek Lake. Davis then sent Lopez a buyer’s representation
agreement, which she requested he sign and return to her. On January 27, Lopez sent Davis the
following email:

Dear Trena,

I would like to inform you that my stock broker has sent you a payment of $105,000.00USD
($500,000.00USD) will be down payment of the property the rest will be completed upon my
arrival and ($98,000.00USD) will be for the purchacse [sic] of Chinese home style furniture,
Chinese style home entertainment, Chinese home decoration and Chinese kitchen appliance in
China.

Please update me once you receive the payment.

Regards,
Mr. Yang Hua Lopez
Chief Financial Officer
Hangzhou Iron & Steel Group Company
Banshan County, Gongshu Dct,
Hangzhou Zhejiang 310022 China.
Tel: +86 10868 99249
Email: yanghua@ejecutivos.com
Website: http://www.hazsteel.com

On February 8, Davis emailed Lopez that she had not received the funds that had
purportedly been sent January 27. Nor had she received the buyer’s representation agreement
from Lopez. In response, Lopez sent Davis the following email:

From: yanghl@informaticos.com

Sent: Wednesday, February 10, 2010 8:13 AM

2
 To: trena.davis@coldwellbankeradr.com

Subject: Dear Trena (update)

Dear Trena

I would like to inform you that my stock broker firm has sent you a new payment of $35,000 via
UPS ($5000.00USD) will be the down payment of the property the balance will be completed
upon my arrival and ($30,000.00USD) will be for the purchacse [sic] of Chinese home style
furniture, Chinese home style entertainment, Chinese home decoration and Chinese kitchen
appliance in China.

You will receive it today via ups, update me once you receive it, have a nice day.

Regards,
Mr. Yang Hua Lopez
Chief Financial Officer.

On the same day, ADT received a check from a “Mr. Green Sound,” identifying himself
as Mr. Lopez’s account manager. The check had two different amounts on its face. In numerals,
it stated “$35,000.00USD,” and in writing, it stated “THIRTY THOUSAND AND 00/100 US
DOLLARS.” The check’s drawer was AXA Insurance Company of Canada with the payer bank
being the Bank of Montreal in Toronto, Ontario.
On February 11, ADT deposited the check into its escrow account at the Bank. The
deposit slip was filled out by Jan Payne, ADT’s president, in the amount of $35,000.00. ADT’s
vice president, Robert Blaase, physically made the deposit at the Bank’s Seven Points branch.
He was told by the branch manager, Leland Pitts, and a Bank employee, Heather McDougald,
that because the check was drawn on a foreign bank, it could take between one and two months
for the funds to be collected. At the time of their meeting with Blaase while he was making this
deposit, McDougald prepared a “foreign check transmittal form.” It showed that following
Blaase’s instructions, ADT was given a provisional credit for the deposited check, pending
collection. Blaase had been given a second option to send the check for collection with a
minimum $75.00 fee plus possible additional fees from the paying bank, the Bank of Montreal.
Taking the second option would have meant that ADT would not receive the provisional credit.
But because Blaase chose the option to receive the provisional credit, the funds were
immediately available for ADT’s use under its deposit and related agreements with the Bank.
On March 1, Payne was told by McDougald, after she had looked on her computer, that
“the funds were there” and “it looks like they’re good.” On March 2, Blaase told Bank teller
Laura Hill at the Bank’s Mabank branch that he wanted to wire $30,000.00 to a bank in Japan.

3
Before sending the wire, he told Hill that he wanted to make sure that the AXA Insurance
Company check had cleared. He testified that she looked at her computer screen and said that it
had cleared. The money was wired to Tokyo that day.
On March 15, the Bank and ADT were notified the check was counterfeit. Attempts
were made to recover the $30,000.00 wired to the Tokyo bank, but to no avail. The Bank then
made a chargeback against ADT’s escrow account for $30,000.00.
ADT later filed suit against the Bank to recover the $30,000.00 chargeback based on the
following legal theories:

1. Negligent misrepresentation and conversion;
2. Violations of the Deceptive Trade Practices Act (DTPA);
3. Common law fraud;
4. Breach of contract (the deposit agreement), equitable estoppel, and failure to return
check;

5. Money had and received; and
6. Promissory estoppel.

The Bank counterclaimed against ADT for its breach of transfer warranties on the
counterfeit check and for its attorney’s fees pursuant to the deposit agreement. The Bank filed a
motion for traditional and no evidence summary judgment asserting that certain claims are
barred by limitations, that ADT’s fraud claim is preempted by the Uniform Commercial Code
(UCC), and that there is no evidence to support ADT’s common law causes of action. The Bank
also moved for summary judgment on its counterclaim for breach of warranties under the UCC
and for attorney’s fees. The court rendered judgment that ADT take nothing on its claims
against the Bank and awarded the Bank $72,938.00 in attorney’s fees against ADT. This appeal
followed.

STANDARD OF REVIEW
Both traditional and no evidence summary judgment claims can be raised in a single
motion so long as the motion sufficiently segregates the traditional claims from the no evidence
claims. Gonzalez v. VATR Const. LLC, 418 S.W.3d 777, 782 (Tex. App.—Dallas 2013, no

4
pet.). When a party moves for summary judgment on both traditional and no evidence grounds,
we first address the no evidence grounds. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248
(Tex. 2013). A no evidence challenge will be sustained when

(a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or
of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence
offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively
establishes the opposite of the vital fact.

Id. The motion must specifically state the elements for which there is no evidence. Salazar v.
Ramos, 361 S.W.3d 739, 745 (Tex. App.—El Paso 2012, pet. denied).
A party moving for traditional summary judgment bears the burden of showing that no
genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX. R.
CIV. P. 166a(c). To determine if there is a fact issue, we review the evidence in the light most
favorable to the nonmovant, crediting favorable evidence if reasonable jurors could do so, and
disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex. 2005). A defendant who conclusively negates at least one of the essential
elements of the cause of action or conclusively establishes an affirmative defense is entitled to
summary judgment. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010). Once
the defendant establishes its right to summary judgment as a matter of law, the burden shifts to
the plaintiff to present evidence raising a genuine issue of material fact. Simulis, L.L.C. v. Gen.
Elec. Capital Corp., 439 S.W.3d 571, 575 (Tex. App.—Houston [14th Dist.] 2014, no pet.).

CHAPTER 4 PREEMPTION
In its second issue, ADT contends that the trial court erred in granting summary judgment
on the Bank’s preemption claim. ADT asserts that its fraud claim, which was based on the
statements made by the Bank’s two employees during the check settlement process, was not
preempted by the Uniform Commercial Code.
Chapter 4 of the UCC establishes the rights and duties between banks and their customers
regarding deposits and collections. TEX. BUS. & COM. CODE ANN. §§ 4.101-.504 (West 2002 &
Supp. 2014); Am. Airlines Emps. Fed. Credit Union v. Martin, 29 S.W.3d 86, 91 (Tex. 2000).
Whether Chapter 4 applies is a question of law, which we review de novo. Id. To the extent
they do not conflict with the UCC’s provisions, common law principles complement the UCC.

5
Plano Lincoln Mercury, Inc. v. Roberts, 167 S.W.3d 616, 624 (Tex. App.—Dallas 2005, no
pet.). Principles of law and equity, including fraud and misrepresentation, supplement the
provisions of the UCC unless displaced by particular UCC provisions. See TEX. BUS. & COM.
CODE ANN. § 1.103(b) (West 2009). Additionally, Official Comment 2, Section 1.103 provides
further guidance as follows:

The Uniform Commercial Code was drafted against the backdrop of existing bodies of law,
including the common law and equity, and relies on those bodies of law to supplement it [sic]
provisions in many important ways. At the same time, the Uniform Commercial Code is the
primary source of commercial law rules in areas that it governs, and its rules represent choices
made by its drafters and the enacting legislatures about the appropriate policies to be furthered in
the transactions it covers. Therefore, while principles of common law and equity may supplement
provisions of the Uniform Commercial Code, they may not be used to supplant its provisions, or
the purposes and policies those provisions reflect, unless a specific provision of the Uniform
Commercial Code provides otherwise.

TEX. BUS. & COM. CODE ANN. § 1.103 cmt. 2. Thus, a common law cause of action can continue
in a commercial law context in Texas when it does not conflict with provisions of the UCC. See
Bryan v. Citizens Nat’l Bank in Abilene, 628 S.W.2d 761, 764 (Tex. 1982).
Relevant to the facts of this case, Section 4.214(a) of the UCC states in pertinent part that

(a) [i]f a collecting bank has made provisional settlement with its customer for an item and fails
by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement
for the item that is or becomes final, the bank may revoke the settlement given by it, charge
back the amount of any credit given for the item to its customer’s account, or obtain refund
from its customer, whether or not it is able to return the item, if by its midnight deadline or
within a longer reasonable time after it learns the facts it returns the item or sends notification
of the facts.

TEX. BUS. & COM. CODE ANN. § 4.214(a). Customers who are victims of fraudulent transactions
often pursue common law causes of action to avoid the bank’s right of chargeback as provided
by the code. Melissa Waite, Check Fraud and the Common Law: At the Intersection of
Negligence and the Uniform Commercial Code, 54 B. C. L. Rev. 2205, 2224 (Nov. 2013). “[The
UCC] is not clear as to whether and under what contexts common law claims should be allowed
in check fraud scenarios because Articles 3 and 4 have no explicit preemption provision.” Id.
When construing a statute, we are to consider, among other things, the object to be
obtained by the legislature and the circumstances under which the statute was enacted. TEX.
GOV’T CODE ANN. § 311.023 (1), (2) (West 2013). The UCC contains a comprehensive and

6
carefully considered allocation of responsibility among parties to a banking relationship in
Texas. Sw. Bank v. Info. Support, 149 S.W.3d 104, 107 (Tex. 2004). Chapter 4 of the UCC
specifies duties and responsibilities for a bank in the actual check processing procedure. But, it
is silent about the bank’s communications with the customer during the check processing
procedure. The Montana Supreme Court, in an opinion involving a similar fact pattern,
determined that common law principles apply when a bank communicates with a depositor who
has inquired about the check processing procedure. See Valley Bank of Ronan v. Hughes, 147
P.3d 185, 191 (Sup. Ct. Mont. 2006).
In that case, the customer alleged that the bank had made misrepresentations about the
check settlement process. He then sued the bank claiming that it had inappropriately charged
back his account after the dishonor of the deposited checks. The Montana Supreme Court
reasoned that because such communications are not addressed with specificity by the UCC,
common law and equitable principles supplement the UCC and govern the legal rights and
responsibilities that applied to the bank’s representations to the customer, upon which the
customer allegedly relied. Id. The Montana Supreme Court thus held that common law
principles apply to bank communications to a depositor inquiring about the processing of checks.
Id. at 192.
We are mindful that a uniform act included in a code shall be construed to effect its
general purpose to make uniform the law of those states that enact it. TEX. GOV’T CODE ANN.
§ 311.028 (West 2013). The UCC itself specifically describes fraud as a cause of action that can
be used to supplement its provisions. TEX. BUS. & COM. CODE ANN. § 1.103. We therefore
agree with the Montana Supreme Court’s holding in Valley Bank of Ronan v. Hughes that
common law fraud principles apply to bank communications during the check processing
procedure. Accordingly, the trial court erred in granting summary judgment on the Bank’s
affirmative defense of preemption as asserted against ADT’s fraud claim. See Fernandez, 315
S.W.3d at 508. We sustain ADT’s second issue.

COMMON LAW FRAUD
In its third issue, ADT argues that the traditional summary judgment was improperly
granted because there are conflicts in the evidence creating disputed issues of fact related to its
common law fraud claim. ADT claims there are fact issues regarding the intention of the tellers

7
in making the representations and whether ADT relied on the Bank’s representations. In its sixth
issue, ADT contends that it produced more than a scintilla of evidence related to its fraud claim,
thereby defeating the Bank’s motion for a no evidence summary judgment on that claim. ADT
claims the summary judgment evidence shows that false representations were made intentionally
and without knowledge of the truth, and ADT reasonably relied on the representation.
Elements of Fraud
A plaintiff, such as ADT, seeking to prevail on a fraud claim must prove that (1) the
defendant made a material misrepresentation; (2) the defendant knew the representation was
false or made the representation recklessly without any knowledge of its truth; (3) the defendant
made the representation with the intent that the other party would act on that representation or
intended to induce the party’s reliance on the representation; and (4) the plaintiff suffered an
injury by actively and justifiably relying on that representation. Exxon Corp. v. Emerald Oil &
Gas Co., L.C., 348 S.W.3d 194, 217 (Tex. 2011).
Material Misrepresentation
ADT claims that Bank employees Heather McDougald and Laura Hill made material
misrepresentations or false statements respectively to Payne and Blaase regarding whether the
counterfeit check had cleared. We first review ADT’s summary judgment evidence concerning
McDougald’s representations to Payne. In her deposition testimony, which is part of the record
before us, Payne recounted her March 1 conversation with McDougald:

Q. Got it. You spoke to Ms. McDougald?
A. Yes.
Q. And what did you ask her? What did she tell you?
A. I asked her, I said, Have you heard anything yet?
Q. What did she tell you?
A. She told me no.
Q. That’s the question you asked all three of those times, right?
A. Yeah.
Q. And then at some point, did somebody tell you, Hey, it’s okay?
A. I asked her when I was in. I made deposits on the 1st of March. I had three deposits that
day, and so - - and that was a Monday, and I asked Heather, and she said, Let me look on
the computer, and she told me then that the funds were there, and she said, it looks like
they’re good.
Q. Did she say anything other than that?
A. I don’t remember.
Q. Tell me as close as you can precisely what she said. The funds were there?
A. I did ask her, I said, Then can I disburse the funds? And she said, Yes. That was the
other thing.
Q. You asked her, Can I disburse the funds?
A. Yes.

8
 Q. And then she said yes. And what else - - what else did she say besides yes to that
question?
A. Nothing, that I can - -
Q. So the only thing that she said in response to your question, Can I disburse the funds, and
she said yes?
A. Said yes.
Q. And that’s all she said?
A. Yes, as far as my recollection, that’s what she said.
Q. Okay, And do you now believe that she was in error when she said that?
A. I think she believed it, but evidently it wasn’t correct.
Q. She obviously wasn’t trying to deceive you in some way, was she?
A. No, I don’t think she was trying to deceive me.

This evidence shows that McDougald told Payne “the funds were there.” Then she said,
“It looks like they are good.” Payne further testified that McDougald told her that she could
disburse the funds. The deposit agreement provides that, in accepting items for deposit, the Bank
assumes no responsibilities beyond the exercise of ordinary care. Further, the agreement
provides that all checks credited to an account are subject to receipt of the proceeds of final
payment by the Bank. The Bank’s policy is to make funds from the depositor’s cash and check
deposits available to the depositor on the first business day after the day it receives the deposit.
Thus, under the deposit agreement and funds availability policy, each of these three statements
made by McDougald to Payne were true. The funds were there, they were good, and ADT could
immediately disburse the funds.
ADT’s purported evidence of a misrepresentation by Hill to Blaase consists of testimony
from Blaase’s deposition as follows:

A. When I walked up to the - - to her at the teller box, I said, I want to make sure that - - I need
to send a wire. How do I do it? Because I haven’t done it before. So she pulled this form out
and she says, Well, I need this information. And I said, Well, I think I have it all, but I want
to make sure that this check has cleared. We’ve been told that it has, Jan had been told that it
has. And she went to her computer screen, you know, maybe 10, 15 seconds, not long, and
said yes, and so then I handed her the slip of paper that Trena had filled this information out,
and Laura filled all this out and asked me to print my name, put my phone number and sign it,
and she’d take care of it.

This testimony establishes only that Hill’s answer to Blaase’s query was based on what
she saw on her computer screen. That screen would have shown the provisional credit that ADT
had received when it deposited the counterfeit check pursuant to the deposit agreement and the
Bank’s funds availability policy. Hill had the same information that McDougald had seen on her
screen the day before. The Bank’s computer showed the availability of the funds and this was

9
reported to Payne and Blaase. For a fraud claim to survive, the company agent that makes the
representation must have the requisite mental state; that is, as relevant here, she must know that
the statement was false. Landers v. Aurora Loan Servs., LLC, 434 S.W.3d 291, 296 (Tex.
App.—Texarkana 2014, no pet.). There is nothing in the record before us that shows either
McDougald or Hill had any knowledge that the information they gave to Payne or Blaase was
false.
Knowing or Reckless Misrepresentation
To establish fraud, ADT was required to produce evidence that McDougald and Hill
knew their statements were false or made recklessly without knowledge of the truth. See
Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 526 (Tex. 1998).
A speaker acts recklessly if he makes representations “about any knowledge of the truth and as a
positive assertion.” Id. at 527. As shown in the paragraphs above, when they spoke to Payne
and Blaase, McDougald and Hill focused on the availability of the funds to ADT, as reflected by
the Bank’s computerized records. Payne and Blaase, however, were attempting to determine if
the counterfeit check had cleared. ADT’s president and vice president interpreted the
communication differently from the Bank’s employees. Fraud requires proof of an affirmative
misrepresentation, not simply a misunderstanding. See Orion Ref. Corp. v. UOP, 259 S.W.3d
749, 771-72 (Tex. App.—Houston [1st Dist.] 2007, pet. denied); Mumphord v. First Victoria
Nat’l Bank, 605 S.W.2d 701, 704 (Tex. App.—Corpus Christi 1980, no writ).
Furthermore, the communication at issue is open to more than one interpretation and
therefore ambiguous. The legal definition of ambiguity is “[d]oubtfulness or uncertainty of
meaning or intention, as in a contractual term or statutory provision; indistinctness of
signification, esp. by reason of doubleness of interpretation.” BLACK’S LAW DICTIONARY 97
(10th ed. 2014). The ambiguous communication does not equate to knowing the representation
was false or made without knowledge of its truth. Therefore, there is no evidence of this element
of fraud in the record before us.
Justifiable Reliance
To prove fraud, ADT must show that it both actually and justifiably relied upon the
alleged misrepresentation to suffer an injury. Blaase asserted that he was relying on what Hill
viewed on her computer screen to determine that the check had cleared. The record shows that
he had asked the Bank’s vice president and branch manager in Gun Barrel City, Leland Pitts, on

10
five separate occasions whether the check had cleared. He was told each time by Pitts that it had
not. He had never dealt with Hill, who was a teller at the Mabank branch of the Bank, regarding
this deposit. To expect her to know the background of this transaction was not justifiable. Payne
could not rely on what McDougald told her about the funds “being there” or “good” and that
they could be disbursed to create a justifiable belief that the check had cleared.
Our supreme court has further stated that a person may not justifiably rely upon a
representation if there are “red flags” indicating reliance is unjustified. In measuring
justifiability, we must inquire whether, given a fraud plaintiff’s individual characteristics,
abilities, and appreciation of facts and circumstances at or before the time of the alleged fraud, it
is extremely unlikely that there is actual reliance on the plaintiff’s part. Grant Thornton LLP v.
Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010). Moreover, a person may not
justifiably rely on a representation if there are “red flags” indicating such reliance is
unwarranted. Id.
The red flags for ADT appeared in the first communication with Lopez and never
stopped. Lopez identified himself as a chief financial officer of a Chinese company. Yet, his
numbers in his communications with ADT were never consistent. He said his “stock broker”
was sending “a payment of $105,000.00USD ($500,000.00USD).” He had his “account
manager,” Mr. Green Sound, send a check for $35,000.00. The check that was sent showed a
numerical amount of $35,000.00 while the amount shown in writing was only $30,000.00.
Lopez initially said he needed “$98,000.00 for the purchase of Chinese home style
furniture, Chinese home style entertainment, Chinese home decorations, and Chinese kitchen
appliances.” But then, he asked that only $30,000.00 be wired for the purchase of these items.
The name of the Chinese chief financial officer, Yang Hua Lopez, was unusual. “Lopez”
is not of Chinese origin. Lopez said the money would be sent by his “stockbroker in America.”
The check, however, was sent from Canada by a “Mr. Green Sound,” who identified himself as
an “account manager.” Further, the counterfeit check was drawn on the Bank of Montreal by a
Canadian insurance company with the name of “AXA.”
Lopez first told ADT that he wanted a house located in its city. But, when sent a list of
prospective properties, he chose a house eighty miles away. He made this choice only one and a
half hours after he had been presented a list of the properties by ADT.

11
 Lopez never signed a buyer’s representation agreement with ADT although he was asked
on numerous occasions to do so. Further, he never signed an earnest money contract for the
property he had selected. Finally, Lopez requested that the funds, which had been paid by a
Canadian insurance company and drawn on a Canadian bank, be wired to a bank in Tokyo, Japan
so that he could purchase furnishings in China for the Texas property.
ADT appeared to accept all of these implausible names, conflicting messages,
inconsistent numbers, contradictory instructions, unusual circumstances, and absence of key
documents at face value, rather than probing further into these red flags to determine if this was a
legitimate transaction. A fraud plaintiff cannot recover if he blindly relies upon a
misrepresentation, the falsity of which would be patent to him if he had utilized his opportunity
to make a cursory examination or investigation. Field v. Mans, 516 U.S. 59, 71, 116 S. Ct. 437,
444, 139 L. Ed. 2d 351 (1995). All of these red flags show that ADT’s alleged reliance on the
Bank employees’ statements regarding the counterfeit check was unjustified. We hold ADT
failed to establish the justifiable reliance element of its fraud cause of action. Grant Thornton,
314 S.W.3d at 923. The record indicates there is no evidence of a material misrepresentation by
the Bank, a knowing or reckless misrepresentation by the Bank, or justifiable reliance on the
Bank’s representation. Accordingly, the trial court correctly granted a summary judgment in
favor of the Bank on ADT’s fraud claim. See Merriman, 407 S.W.3d at 248; Exxon Corp., 348
S.W.3d at 217. We overrule ADT’s third and sixth issues.

OTHER CAUSES OF ACTION
In its fifth issue, ADT contends that the bank improperly charged back its provisional
credit for the counterfeit check in the amount of $30,000.00 and the trial court erred in denying
its alternative causes of action. ADT further asserts that the trial court erred in granting
summary judgment in favor of the Bank on its counterclaim for ADT’s breach of UCC
warranties.
Breach of Contract
ADT alleged that the Bank’s withdrawal of funds from ADT’s account was a breach of
the deposit agreement and the Bank breached its common law duty to perform. The relationship
of a bank to a general depositor is contractual, that of debtor-creditor arising from the depository
contract. Trevino & Assocs. Mech., L.P. v. Frost Nat’l Bank, 400 S.W.3d 139, 148 (Tex.

12
App.—Dallas 2013, no pet.). The laws of this state govern a deposit contract between a bank
and a consumer account holder if the branch or separate office of the bank that accepts the
deposit contract is located in Texas. TEX. BUS. & COM. CODE ANN. § 4.102(c). Under the laws
of this state, the UCC regulates a bank’s handling of deposits and collections for its customers.
Id. §§ 4.101-.504. The relationship may also be governed in part by agreements between the
bank and its customer. Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462 S.W.3d 128,
133 (Tex. App.—Houston [1st Dist.] 2015, no pet.). The UCC, in these relationships, contains a
comprehensive and carefully considered allocation of responsibility among parties to banking
relationships. Sw. Bank, 149 S.W.3d at 107; Martin, 29 S.W.3d at 91. Where the UCC applies,
common law rules regarding breach of contract do not apply. Roberts, 167 S.W.3d at 624.
Further, when the UCC applies, common law claims that conflict with the UCC are precluded.
See Contractors Source, Inc., 462 S.W.3d at 138.
In a chargeback such as happened here, Section 4.214 of the UCC applies. TEX. BUS. &
COM. CODE ANN. § 4.214(a). Any cause of action that ADT had for breach of contract was
preempted by the UCC. Roberts, 167 S.W.3d at 624. When the Canadian check deposited by
ADT was determined to be counterfeit, the Bank was authorized by the UCC to effectuate a
chargeback. TEX. BUS. & COM. CODE ANN. § 4.214(a). The chargeback would have also been
allowed by the deposit agreement. The trial court did not err by granting the Bank a summary
judgment on ADT’s breach of contract claim. See Fernandez, 315 S.W.3d at 508.
Equitable Estoppel
ADT asserted that the Bank is estopped to deny that ADT was informed the check had
cleared or was good. The doctrine of equitable estoppel requires (1) a false representation or
concealment of material facts; (2) made with knowledge, actual or constructive, of those facts;
(3) with the intention that it should be acted upon; (4) to a party without knowledge or means of
obtaining knowledge of the facts; (5) who detrimentally relies on the representations. Kenneco
Energy, Inc., 962 S.W.2d at 515-16.
The first element of equitable estoppel required a false statement to ADT by McDougald
or Hill. When McDougald and Hill respectively spoke to Payne and Blaase, they were focused
on whether the funds were in ADT’s account. The uncontroverted evidence is that the funds
were in ADT’s account due to the provisional credit Blaase had opted for. Neither McDougald

13
nor Hill made a false statement. Therefore, this defense fails. See Merriman, 407 S.W.3d at
248.
Failure to Return Check
In its petition, ADT complained that its claim against the maker of the check is precluded
due to the Bank’s failure to return the alleged counterfeit check. In its brief, ADT has not argued
and analyzed its position on the Bank’s failure to return the check. Further, it has not cited any
authority to support its position. Rule 38 of the Rules of Appellate Procedure provides that a
brief to the court of appeals shall contain, among other things, “a clear and concise argument for
the contentions made, with appropriate citations to authorities in the record.” TEX. R. APP. P.
38.1(i); In re B.A.B., 124 S.W.3d 417, 420 (Tex. App.—Dallas 2004, no pet.). The failure to
adequately brief an issue, either by failing to specifically argue and analyze one’s position or
provide citations to authorities, waives any error on appeal. Id. Therefore, ADT has waived any
error regarding this cause of action.
Promissory Estoppel
ADT alleged that the Bank consented to inform ADT if the check was not good and was
damaged when it relied on Bank employees’ statements that the check was good. The requisites
of promissory estoppel are (1) a promise, (2) foreseeability of reliance thereon by the promisor,
and (3) substantial reliance by the promisee to his detriment. Henry Schein, Inc. v. Stromboe,
102 S.W.3d 675, 686 n.25 (Tex. 2002). If an alleged promise is part of a valid contract, the
promisee cannot disregard the contract and sue for reliance damages under the doctrine of
promissory estoppel. BP Am. Prod. Co. v. Zaffirini, 419 S.W.3d 485, 507 (Tex. App.—San
Antonio 2013, pet. denied). Promissory estoppel is not applicable to a promise covered by a
valid contract between the parties. Id.
As explained above, there was a valid contract between the Bank and ADT with regard to
deposits and collections. Therefore, even if this contract was not preempted by the provisions of
the UCC related to chargeback on provisional credits, a promissory estoppel cause of action
would not have been available to ADT in this case. See id. The trial court did not err in granting
the Bank’s motion for summary judgment on ADT’s claim for promissory estoppel. See
Fernandez, 315 S.W.3d at 508.

14
Money Had and Received
ADT alleged that the Bank wrongfully withdrew $30,000.00 from ADT’s account and it
would be unconscionable for the Bank to retain it. To recover in a cause of action for money had
and received, all a plaintiff need show is that the defendant holds money that in equity and good
conscience belongs to the plaintiff. Staats v. Miller, 243 S.W.2d 686, 687 (Tex. 1951). This
cause of action “looks solely to the inquiry, whether the defendant holds money which belongs to
the plaintiff.” Id. at 687-88. Money had and received is a common law claim.1 It is not listed as
a cause of action that supplements the UCC. See TEX. BUS. & COM. CODE ANN. § 1.103(b).
Furthermore, the Bank withdrew the $30,000.00 pursuant to Section 4.214 of the UCC, which
gives the Bank the right to charge back the amount previously given for a dishonored item. TEX.
BUS. & COM. CODE ANN. § 4.214. Therefore, the common law cause of action for money had
and received has been supplanted by Chapter 4 of the UCC. The trial court properly granted
summary judgment in favor of the Bank on ADT’s claim for money had and received. See
Fernandez, 315 S.W.3d at 508.
Negligent Misrepresentation and Conversion
ADT alleged that the Bank’s actions constituted negligent misrepresentation and
conversion. Causes of action for negligent misrepresentation and conversion must be filed
within two years from the date that they occur. If not, the claim is barred by the statute of
limitations. TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 (West Supp. 2014); Tex. Am. Corp. v.
Woodbridge Joint Venture, 809 S.W.2d 299, 303 (Tex. App.—Fort Worth 1991, writ denied).
Here, the alleged negligent misrepresentation and conversion would have occurred in
March 2010. ADT filed its first original petition against the Bank in September 2012. This was
more than two years after ADT’s cause of action would have accrued, and the negligent
misrepresentation and conversion causes of action are therefore barred by the statute of
limitations. The trial court did not err in granting summary judgment in favor of the Bank on
ADT’s negligent misrepresentation and conversion claims. See Fernandez, 315 S.W.3d at 508.
Deceptive Trade Practices Act
Any cause of action filed under the DTPA must be brought within two years after
discovery of the deceptive act complained of. TEX. BUS. & COM. CODE ANN. § 17.565 (West

1
At common law, this cause of action was known as assumpsit. Michol O’Connor, O’CONNOR’S TEXAS
CAUSES OF ACTION 131 (2015).

15
2011). Again, this cause of action would have accrued in March 2010 and suit was not filed until
September 2012. ADT’s DTPA cause of action is barred by the statute of limitations. Id. The
trial court did not err in granting summary judgment in favor of the Bank on ADT’s DTPA cause
of action. See Fernandez, 315 S.W.3d at 508.
The Bank’s Counterclaim
The Bank counterclaimed for ADT’s breach of warranties under UCC Sections 3.416 and
4.207. See TEX. BUS. & COM. CODE ANN. §§ 3.416, 4.207 (West Supp. 2014). Pursuant to those
sections, ADT warranted that it was entitled to enforce the check sent by Lopez and that the
signature on the check was authentic. Id.
ADT argues that the warranties apply only to checks that are deposited, not those sent for
collection. The evidence shows the check at issue was deposited. Additionally, the UCC does
not make that distinction regarding warranties. The UCC provides that when a person transfers
an instrument for consideration, he provides certain warranties. Id. An instrument is transferred
when it is delivered by a person other than its issuer for the purpose of giving to the person
receiving delivery the right to enforce the instrument. TEX. BUS. & COM. CODE ANN. § 3.203
(West 2002).
ADT further asserts that Sections 3.416 and 4.207 apply to negotiable instruments and a
counterfeit check is not negotiable, but only a facsimile of a negotiable instrument. Again, this is
not an accurate distinction. Classification of an item as a negotiable instrument is based on form.
TEX. BUS. & COM. CODE ANN. § 3.104(f) (West Supp. 2014). The evidence shows that the check
at issue was counterfeit. Therefore, ADT breached its warranty that all signatures on the
instrument are authentic and that it was entitled to enforce the check. See TEX. BUS. & COM.
CODE ANN. §§ 3.416, 4.207. Accordingly, the trial court did not err in granting summary
judgment in favor of the Bank on its counterclaim for breach of warranties under the UCC. See
TEX. R. CIV. P. 166a(c).
Summation
ADT has not shown error in the trial court’s determination that the Bank is entitled to
summary judgment on each of ADT’s alternative causes of action, its defense of equitable
estoppel, or on the Bank’s counterclaim. Accordingly, we overrule ADT’s fifth issue.

16
 VOLUMINOUS RECORDS
In its first issue, ADT contends that the trial court erred in striking much of the deposition
testimony of Janet Payne, Robert Blaase, Leland Pitts, and Heather McDougald. In response to
the Bank’s objection, the trial court struck all deposition testimony that was not specifically
referenced in ADT’s response to the Bank’s motion for summary judgment. ADT argues that the
depositions were not voluminous and, in light of today’s technology, searching for words can be
done electronically.
Rulings concerning the admission or exclusion of summary judgment evidence are
reviewed under an abuse of discretion standard. Barraza v. Eureka Co., 25 S.W.3d 225, 228
(Tex. App.—El Paso 2000, pet. denied). A trial court abuses its discretion if it acts without any
reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701
S.W.2d 238, 241 (Tex. 1985).
A general reference to a voluminous summary judgment record is inadequate to meet the
evidentiary burden in a summary judgment. Ramirez v. Colonial Freight Warehouse Co., 434
S.W.3d 244, 250 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). An appellant has a duty to
show that the record supports its contentions. Blake v. Intco Invs. of Tex., Inc., 123 S.W.3d
521, 525 (Tex. App.—San Antonio 2003, no pet.). Here, ADT made reference to portions of
each of the four depositions to support its position on the summary judgment. However, it
attached each of the four depositions in its entirety. The trial court should not be compelled to
sift through hundreds of pages of depositions to search for evidence supporting a summary
judgment contestant’s contentions. Guthrie v. Suiter, 934 S.W.2d 820, 826 (Tex. App.—
Houston [1st Dist.] 1996, no writ.). Therefore, the trial court did not abuse its discretion by
refusing to consider the remainder of the depositions of Payne, Blaase, McDougald, and Pitts
that were not specifically cited to it in ADT’s summary judgment response. We overrule ADT’s
first issue.

ATTORNEY’S FEES
Finally, in its fourth issue, ADT challenges the trial court’s award of attorney’s fees to
the Bank on its counterclaim. ADT contends that attorney’s fees are not warranted because no
actual damages were awarded to the Bank, the Bank presented no claims for affirmative relief,
and the services of the Bank’s attorneys were only defensive to ADT’s claim.

17
 The issue of whether a party is entitled to recover attorney’s fees is a question of law for
the court to determine. Jackson Law Office, P.C. v. Chappell, 37 S.W.3d 15, 23 (Tex. App.—
Tyler 2000, pet. denied). A party may recover attorney’s fees only as provided by contract or
statute. Woodhaven Partners, LTD v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex.
App.—Dallas 2014, no pet.). Parties are free to contract for a fee recovery standard either more
or less strict than Chapter 38 of the Civil Practice and Remedies Code. Intercontinental Group
P’ship v. K.B. Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009). When parties include
an attorney’s fee provision in a contract, the language of the contract controls over the language
of the statute. Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 88 (Tex.
App.—Houston [1st Dist.] 2013, pet. denied) (Keyes, J., dissenting). Whether a party is a
prevailing party is based on success on the merits, not the award or denial of damages. Robbins
v. Capozzi, 100 S.W.3d 18, 27 (Tex. App.—Tyler 2002, no pet.). A prevailing party is one who
is vindicated by the trial court’s judgment. Id.
The deposit agreement between the Bank and ADT included the following clause:

You also agree to pay all attorney’s fees, costs and expenses that financial institution may incur as
a result of any claim or action made against financial institution by you or on your behalf related
to your account where financial institution is found not to be liable for such claim.

The Bank sought attorney’s fees pursuant to this clause in the deposit agreement. The
parties’ agreement specifically stated that the Bank would be entitled to its attorney’s fees if it
was found not to be liable on any claim made by ADT. Although the Bank received no damages
or affirmative relief, it was the prevailing party in this litigation due to the fact that it was found
not to be liable on the claims made against it by ADT. Id. The trial court properly awarded the
Bank its attorney’s fees. We overrule ADT’s fourth issue.

DISPOSITION
We affirm the trial court’s judgment.
JAMES T. WORTHEN
Chief Justice

Opinion delivered September 16, 2015.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)

18
American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

2015 WL 5439686 West Headnotes (41)
Only the Westlaw citation is currently available.

NOTICE: THIS OPINION HAS NOT BEEN [1]
Judgment
RELEASED FOR PUBLICATION IN THE
PERMANENT LAW REPORTS. UNTIL RELEASED,
IT IS SUBJECT TO REVISION OR WITHDRAWAL. Both traditional and no evidence summary
judgment claims can be raised in a single motion
Court of Appeals of Texas, so long as the motion sufficiently segregates the
Tyler. traditional claims from the no evidence claims.
American Dream Team, Inc., Appellant
v. Cases that cite this headnote
Citizens State Bank, Appellee

NO. 12–14–00117–CV | Opinion delivered
September 16, 2015
[2]
Appeal and Error

Synopsis
When a party moves for summary judgment on
Background: Accountholder brought action against bank
both traditional and no evidence grounds, the
for negligent misrepresentation and conversion, violations
Court of Appeals first addresses the no evidence
of the Deceptive Trade Practices Act (DTPA), common
grounds.
law fraud, breach of contract, equitable estoppel, failure
to return check, money had and received, and promissory
estoppel. The 173rd Judicial District Court, Henderson Cases that cite this headnote
County, Dan Moore, J., granted summary judgment for
bank and awarded attorney fees. Accountholder appealed.

[3]
Fraud
Holdings: The Court of Appeals, James T. Worthen, C.J.,
held that:
[1] Principles of law and equity, including fraud and
Uniform Commercial Code (UCC) does not preempt misrepresentation, supplement the provisions of
common law fraud principles as applied to bank the Uniform Commercial Code (UCC) unless
communications during the check processing procedure; displaced by particular UCC provisions. Tex.
[2] Bus. & C. Code § 1.103(b).
bank teller’s statement that a check had “cleared” was
not fraudulent;
Cases that cite this headnote
[3]
any reliance on bank employees’ statements to
conclude the check had cleared was not reasonable; and
[4]
any common law cause of action for money had and
[4]
received was supplanted by the UCC. Common Law

Affirmed. A common law cause of action can continue in a
commercial law context in Texas when it does
not conflict with provisions of the Uniform
Commercial Code (UCC). Tex. Bus. & C. Code

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

§ 1.103.
[8]
Banks and Banking
Cases that cite this headnote

Bank employee’s statements to accountholder’s
representative that the funds from a recently
[5] deposited check drawn on a foreign bank were
Statutes “there,” that it “looks like they are good,” and
that accountholder could disburse the funds to
another foreign bank account were true, and thus
A uniform act included in a code shall be the statements did not satisfy the “material
construed to effect its general purpose to make misrepresentation” element of common law
uniform the law of those states that enact it. fraud, even though the bank later determined
that the check was counterfeit and subject to
Cases that cite this headnote chargeback, since the bank employee’s
statements were consistent with the bank’s
policy to make funds from deposits available
before the credit to the accountholder became
final.
[6]
Fraud
Cases that cite this headnote
The Uniform Commercial Code (UCC) does not
preempt common law fraud principles as applied
to bank communications during the check
processing procedure. Tex. Bus. & C. Code § [9]
Banks and Banking
1.103.

Cases that cite this headnote Bank teller’s statement that a check with funds
the accountholder wanted to use for a wire
transfer had “cleared” was not made with
knowledge of the statement’s falsity, as required
to subject the bank to liability for common law
[7]
Fraud fraud, where teller answered accountholder’s
representative’s query based on what teller saw
on her computer screen.
A plaintiff seeking to prevail on a fraud claim
must prove that (1) the defendant made a
Cases that cite this headnote
material misrepresentation; (2) the defendant
knew the representation was false or made the
representation recklessly without any knowledge
of its truth; (3) the defendant made the
representation with the intent that the other party [10]
Fraud
would act on that representation or intended to
induce the party’s reliance on the representation;
and (4) the plaintiff suffered an injury by A speaker acts recklessly, as would support
actively and justifiably relying on that fraud liability, if he makes representations about
representation. any knowledge of the truth and as a positive
assertion.
Cases that cite this headnote
Cases that cite this headnote

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

Cases that cite this headnote

[11]
Fraud
[14]
Fraud
Fraud requires proof of an affirmative
misrepresentation, not simply a
misunderstanding. A person may not justifiably rely on a
representation, as required for fraud liability, if
there are “red flags” indicating such reliance is
Cases that cite this headnote unwarranted.

Cases that cite this headnote
[12]
Fraud

[15]
It was not justifiable for accountholder’s Fraud
representative to conclude that a recently
deposited $30,000 check drawn on a foreign
bank had actually cleared in reliance on a bank A fraud plaintiff can not recover if he blindly
teller’s statement that the check cleared and relies upon a misrepresentation, the falsity of
another bank employee’s statements that the which would be patent to him if he had utilized
funds were “there” and that it “looks like they his opportunity to make a cursory examination
are good,” and thus those statements did not or investigation.
subject the bank to liability for common law
fraud, where the representative had asked the
bank’s vice president on five separate occasions Cases that cite this headnote
whether the check had cleared and he was told
each time that it had not, and the check was part
of a suspicious transaction with a person who
claimed to be a Chinese business executive and [16]
Banks and Banking
who claimed to need the Texas-based
accountholder to wire the proceeds of the check
to Japan to pay for home furnishings.
The relationship of a bank to a general depositor
is contractual, that of debtor-creditor arising
Cases that cite this headnote from the depository contract.

Cases that cite this headnote

[13]
Fraud

[17]
Banks and Banking
In measuring justifiability of reliance supporting
fraud, courts must inquire whether, given a fraud
plaintiff’s individual characteristics, abilities,
Although the Uniform Commercial Code (UCC)
and appreciation of facts and circumstances at or
regulates a bank’s handling of deposits and
before the time of the alleged fraud, it is
collections for its customers, the relationship
extremely unlikely that there is actual reliance
may also be governed in part by agreements
on the plaintiff’s part.
between the bank and its customer. Tex. Bus. &

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

C. Code § 4.101 et seq.

Cases that cite this headnote
[21]
Estoppel

[18]
Contracts Bank teller’s statement that a check with funds
the accountholder wanted to use for a wire
transfer had “cleared” was not a “false
Where the Uniform Commercial Code (UCC) representation or concealment of material facts,”
applies, common law rules regarding breach of as required for equitable estoppel, where the
contract do not apply, and common law claims account had been provisionally credited with
that conflict with the UCC are precluded. Tex. funds from the deposit, and the issue of whether
Bus. & C. Code § 4.101 et seq. the funds were in the account was what the teller
was focused on.
Cases that cite this headnote

Cases that cite this headnote

[19]
Banks and Banking
[22]
Estoppel
Any cause of action that accountholder had
against bank for breach of deposit agreement,
for bank’s act of making a chargeback to Bank employee’s statements to accountholder’s
recover funds from a counterfeit check representative that the funds from a recently
deposited in accountholder’s account, was deposited check drawn on a foreign bank were
preempted by the Uniform Commercial Code “there,” that it “looks like they are good,” and
(UCC) provision giving banks the right to that accountholder could disburse the funds to
charge back the amount previously given for a another foreign bank account were true, and thus
dishonored item. Tex. Bus. & C. Code § the statements did not satisfy the “false
4.214(a). representation or concealment of material facts”
element of equitable estoppel, even though the
bank later determined that the check was
Cases that cite this headnote counterfeit and subject to chargeback, since the
bank employee’s statements were consistent
with the bank’s policy to make funds from
deposits available before the credit to the
[20] accountholder became final.
Estoppel

Cases that cite this headnote
Doctrine of equitable estoppel requires (1) a
false representation or concealment of material
facts; (2) made with knowledge, actual or
constructive, of those facts; (3) with the
[23]
intention that it should be acted upon; (4) to a Appeal and Error
party without knowledge or means of obtaining
knowledge of the facts; (5) who detrimentally
relies on the representations. Accountholder’s failure to argue and analyze its
position on appeal or cite any supporting
authority waived any error regarding trial
Cases that cite this headnote court’s summary judgment in bank’s favor on

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

accountholder’s cause of action for failing to
return a check that the bank determined was To recover in a cause of action for money had
counterfeit. Tex. R. App. P. 38.1(i). and received, all a plaintiff need show is that the
defendant holds money that in equity and good
conscience belongs to the plaintiff.
Cases that cite this headnote

Cases that cite this headnote

[24]
Implied and Constructive Contracts
[28]
Implied and Constructive Contracts
The requisites of promissory estoppel are (1) a
promise, (2) foreseeability of reliance thereon by
the promisor, and (3) substantial reliance by the Money had and received is a common law
promisee to his detriment. claim.

Cases that cite this headnote Cases that cite this headnote

[25] [29]
Implied and Constructive Contracts Banks and Banking

If an alleged promise is part of a valid contract, Any common law cause of action against bank
the promisee cannot disregard the contract and for money had and received, based on bank’s
sue for reliance damages under the doctrine of chargeback of funds from a deposit of a
promissory estoppel. counterfeit check, was supplanted by the
Uniform Commercial Code (UCC) provision
giving banks the right to charge back the amount
Cases that cite this headnote previously given for a dishonored item. Tex.
Bus. & C. Code §§ 1.103(b), 4.214.

Cases that cite this headnote
[26]
Implied and Constructive Contracts

Even if bank consented to inform accountholder
[30]
if a suspicious check deposited in the account Limitation of Actions
was not good, that promise did not give rise to
promissory estoppel, where there was a valid
contract between accountholder and bank with Accountholder’s causes of action against bank
regard to deposits and collections. for alleged negligent misrepresentation and
conversion would have accrued, thus starting the
two-year limitations period, when the alleged
Cases that cite this headnote negligent misrepresentation and conversion
would have occurred. Tex. Civ. Prac. & Rem.
Code Ann. § 16.003.

[27]
Implied and Constructive Contracts Cases that cite this headnote

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

Rulings concerning the admission or exclusion
of summary judgment evidence are reviewed
under an abuse of discretion standard, and a trial
[31]
Limitation of Actions court abuses its discretion if it acts without any
reference to any guiding rules or principles.

Any Deceptive Trade Practices Act (DTPA)
cause of action against bank, related to bank’s Cases that cite this headnote
chargeback of funds from a deposit of a
counterfeit check, would have accrued upon
discovery of the deceptive act complained of.
Tex. Bus. & C. Code § 17.565. [35]
Judgment

Cases that cite this headnote
A general reference to a voluminous summary
judgment record is inadequate to meet the
evidentiary burden in a summary judgment.
[32]
Banks and Banking
Cases that cite this headnote

Under the Uniform Commercial Code (UCC)
provisions stating that when a person transfers
an instrument for consideration, he provides [36]
certain warranties, the UCC does not make a Appeal and Error
distinction between checks that are deposited
and those that are sent for collection. Tex. Bus.
& C. Code §§ 3.203, 3.416, 4.207. An appellant has a duty to show that the record
supports its contentions.

Cases that cite this headnote
Cases that cite this headnote

[33]
Banks and Banking [37]
Appeal and Error

Counterfeit check was a “negotiable instrument”
governed by the statute providing that upon Trial court acted within its discretion in striking
depositing a check a bank customer warrants the portions of four voluminous depositions that
that all signatures on the instrument are were not specifically referenced in plaintiff’s
authentic and that it is entitled to enforce the response to defendant’s motion for summary
check. Tex. Bus. & C. Code §§ 3.104(f), 3.416, judgment, where plaintiff attached the entire
4.207. depositions to the response.

Cases that cite this headnote Cases that cite this headnote

[38]
[34]
Appeal and Error Costs

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

The issue of whether a party is entitled to
recover attorney fees is a question of law for the
court to determine.

APPEAL FROM THE 173RD JUDICIAL DISTRICT
Cases that cite this headnote COURT, HENDERSON COUNTY, TEXAS. DAN
MOORE, JUDGE.

Attorneys and Law Firms
[39] E. John Emmett, for Appellant.
Costs
Scott A. Ritheson, for Appellee.
A party may recover attorney fees only as
provided by contract or statute, and parties are Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
free to contract for a fee recovery standard either
more or less strict than provided by the Civil
Practice and Remedies Code.

OPINION
Cases that cite this headnote

JAMES T. WORTHEN, Chief Justice

[40]
*1 American Dream Team, Inc. (ADT) filed suit against
Costs Citizens State Bank alleging the Bank had improperly
charged back $30,000.00 against its account for a
provisional credit extended on a counterfeit check. The
Under an attorney fee provision in a contract, trial court granted the Bank’s motion for traditional and
whether a party is a prevailing party is based on no evidence summary judgment, rendering a take nothing
success on the merits, not the award or denial of judgment on all of ADT’s claims, and awarding
damages. attorney’s fees to the Bank. In six issues, ADT contends
the trial court reversibly erred. We affirm.
Cases that cite this headnote

BACKGROUND
[41]
Costs ADT is a real estate brokerage firm specializing in selling
properties in the Cedar Creek Lake area of Henderson
County, Texas. On January 23, 2010, it received the
Under a contractual attorney fee clause following system wide email sent by the marketer Point2
providing that accountholder agreed to pay Real Estate:
bank’s attorney fees if bank was found not to be
liable for “any claim or action” made against the 23–Jan–2010
bank by the accountholder, bank was entitled to
recover attorney fees upon being found not to be Prospect Email
liable on any of the claims made against it by
accountholder, even though the bank received You are receiving this email because Mr. Yang Hua
no damages or affirmative relief. Lopez has emailed you from your website.

Email: yanghl@informaticos.com
Cases that cite this headnote
Dear Sir/Madam, I am Mr. Yang Hua Lopez currently

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

the Chief Financial Officer (CFO) Hangzhou Iron & Tel: +86 10868 99249
Steel Group Company (HISGC) Website:
http://www.hazsteel.com I am retiring soon will be Email: yanghua@ejecutivos.com
relocating to Texas for Good, after searching the
Internet for a reliable real estate agent I found your firm Website: http://www.hazsteel.com
have decided to choose your firm to buy my permanent
home. The home will be a cash buy and I will fly to On February 8, Davis emailed Lopez that she had not
your city for viewing the property but before that I received the funds that had purportedly been sent January
would like my stock broker in America to send the 27. Nor had she received the buyer’s representation
money to your firm via a lawyer/solicitor to keep in a agreement from Lopez. In response, Lopez sent Davis the
trust account upon arrival. I need a 4 bed rooms/5 bed following email:
room’s home of $300,000.00USD - $1,200,000.00USD
In nice neighborhood in your city and state. Email is *2 From: yanghl@informaticos.com
better than telephone due to my accent and english.
Sent: Wednesday, February 10, 2010 8:13 AM
Regards, Mr. Yang Hua Lopez Chief Financial Officer,
Email; yanghl@informaticos.com To: trena.davis@coldwellbankeradr.com
Manage Prospect—Mr. Yang Hua Lopez Subject: Dear Trena (update) Dear Trena
The following day, Trena Davis, a real estate agent with I would like to inform you that my stock broker firm
ADT, responded to Lopez by email stating that she would has sent you a new payment of $35,000 via UPS
be happy to assist him in his home search. Upon his ($5000.00USD) will be the down payment of the
request, she sent him more than ten prospective properties property the balance will be completed upon my arrival
meeting his stated requirements. Within an hour and a and ($30,000.00USD) will be for the purchacse [sic] of
half, Lopez chose what he described as his “dream home” Chinese home style furniture, Chinese home style
in Lewisville, Texas, more than eighty miles away from entertainment, Chinese home decoration and Chinese
Cedar Creek Lake. Davis then sent Lopez a buyer’s kitchen appliance in China.
representation agreement, which she requested he sign
and return to her. On January 27, Lopez sent Davis the You will receive it today via ups, update me once you
following email: receive it, have a nice day.

Dear Trena, Regards,

I would like to inform you that my stock broker has Mr. Yang Hua Lopez
sent you a payment of $105,000.00USD
($500,000.00USD) will be down payment of the Chief Financial Officer.
property the rest will be completed upon my arrival and
($98,000.00USD) will be for the purchacse [sic] of On the same day, ADT received a check from a “Mr.
Chinese home style furniture, Chinese style home Green Sound,” identifying himself as Mr. Lopez’s
entertainment, Chinese home decoration and Chinese account manager. The check had two different amounts
kitchen appliance in China. on its face. In numerals, it stated “$35,000.00USD,” and
in writing, it stated “THIRTY THOUSAND AND 00/100
Please update me once you receive the payment. U.S. DOLLARS.” The check’s drawer was AXA
Insurance Company of Canada with the payer bank being
Regards, the Bank of Montreal in Toronto, Ontario.
Mr. Yang Hua Lopez On February 11, ADT deposited the check into its escrow
account at the Bank. The deposit slip was filled out by Jan
Chief Financial Officer
Payne, ADT’s president, in the amount of $35,000.00.
Hangzhou Iron & Steel Group Company ADT’s vice president, Robert Blaase, physically made the
deposit at the Bank’s Seven Points branch. He was told by
Banshan County, Gongshu Dct, the branch manager, Leland Pitts, and a Bank employee,
Heather McDougald, that because the check was drawn
Hangzhou Zhejiang 310022 China. on a foreign bank, it could take between one and two
months for the funds to be collected. At the time of their

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

meeting with Blaase while he was making this deposit, preempted by the Uniform Commercial Code (UCC), and
McDougald prepared a “foreign check transmittal form.” that there is no evidence to support ADT’s common law
It showed that following Blaase’s instructions, ADT was causes of action. The Bank also moved for summary
given a provisional credit for the deposited check, judgment on its counterclaim for breach of warranties
pending collection. Blaase had been given a second under the UCC and for attorney’s fees. The court rendered
option to send the check for collection with a minimum judgment that ADT take nothing on its claims against the
$75.00 fee plus possible additional fees from the paying Bank and awarded the Bank $72,938.00 in attorney’s fees
bank, the Bank of Montreal. Taking the second option against ADT. This appeal followed.
would have meant that ADT would not receive the
provisional credit. But because Blaase chose the option to
receive the provisional credit, the funds were immediately
available for ADT’s use under its deposit and related
agreements with the Bank. STANDARD OF REVIEW
[1] [2]
On March 1, Payne was told by McDougald, after she had Both traditional and no evidence summary judgment
looked on her computer, that “the funds were there” and claims can be raised in a single motion so long as the
“it looks like they’re good.” On March 2, Blaase told motion sufficiently segregates the traditional claims from
Bank teller Laura Hill at the Bank’s Mabank branch that the no evidence claims. Gonzalez v. VATR Const. LLC,
he wanted to wire $30,000.00 to a bank in Japan. Before 418 S.W.3d 777, 782 (Tex.App.–Dallas 2013, no pet.).
sending the wire, he told Hill that he wanted to make sure When a party moves for summary judgment on both
that the AXA Insurance Company check had cleared. He traditional and no evidence grounds, we first address the
testified that she looked at her computer screen and said no evidence grounds. Merriman v. XTO Energy, Inc., 407
that it had cleared. The money was wired to Tokyo that S.W.3d 244, 248 (Tex.2013). A no evidence challenge
day. will be sustained when

On March 15, the Bank and ADT were notified the check (a) there is a complete absence of
was counterfeit. Attempts were made to recover the evidence of a vital fact, (b) the
$30,000.00 wired to the Tokyo bank, but to no avail. The court is barred by rules of law or of
Bank then made a chargeback against ADT’s escrow evidence from giving weight to the
account for $30,000.00. only evidence offered to prove a
vital fact, (c) the evidence offered
ADT later filed suit against the Bank to recover the to prove a vital fact is no more than
$30,000.00 chargeback based on the following legal a mere scintilla, or (d) the evidence
theories: conclusively establishes the
opposite of the vital fact.
*3 1. Negligent misrepresentation and conversion;
Id. The motion must specifically state the elements for
2. Violations of the Deceptive Trade Practices Act which there is no evidence. Salazar v. Ramos, 361 S.W.3d
(DTPA); 739, 745 (Tex.App.–El Paso 2012, pet. denied).

3. Common law fraud; A party moving for traditional summary judgment bears
the burden of showing that no genuine issue of material
4. Breach of contract (the deposit agreement), fact exists and that it is entitled to judgment as a matter of
equitable estoppel, and failure to return check; law. TEX. R. CIV. P. 166a(c). To determine if there is a
fact issue, we review the evidence in the light most
5. Money had and received; and favorable to the nonmovant, crediting favorable evidence
if reasonable jurors could do so, and disregarding contrary
6. Promissory estoppel.
evidence unless reasonable jurors could not. City of Keller
v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). A defendant
The Bank counterclaimed against ADT for its breach of
who conclusively negates at least one of the essential
transfer warranties on the counterfeit check and for its
elements of the cause of action or conclusively establishes
attorney’s fees pursuant to the deposit agreement. The
Bank filed a motion for traditional and no evidence an affirmative defense is entitled to summary judgment.
summary judgment asserting that certain claims are Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508
(Tex.2010). Once the defendant establishes its right to
barred by limitations, that ADT’s fraud claim is
summary judgment as a matter of law, the burden shifts to
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

the plaintiff to present evidence raising a genuine issue of policies those provisions reflect,
material fact. Simulis, L.L.C. v. Gen. Elec. Capital Corp., unless a specific provision of the
439 S.W.3d 571, 575 (Tex.App.–Houston [14th Dist.] Uniform Commercial Code
2014, no pet.). provides otherwise.

TEX. BUS. & COM. CODE ANN. § 1.103 cmt. 2. Thus,
a common law cause of action can continue in a
commercial law context in Texas when it does not
CHAPTER 4 PREEMPTION conflict with provisions of the UCC. See Bryan v. Citizens
Nat’l Bank in Abilene, 628 S.W.2d 761, 764 (Tex.1982).
*4 In its second issue, ADT contends that the trial court
erred in granting summary judgment on the Bank’s
Relevant to the facts of this case, Section 4.214(a) of the
preemption claim. ADT asserts that its fraud claim, which
UCC states in pertinent part that
was based on the statements made by the Bank’s two
employees during the check settlement process, was not
preempted by the Uniform Commercial Code. (a) [i]f a collecting bank has
made provisional settlement with
[3] [4] its customer for an item and fails
Chapter 4 of the UCC establishes the rights and
by reason of dishonor,
duties between banks and their customers regarding
deposits and collections. TEX. BUS. & COM. CODE suspension of payments by a
bank, or otherwise to receive
ANN. §§ 4.101–.504 (West 2002 & Supp.2014); Am.
Airlines Emps. Fed. Credit Union v. Martin, 29 S.W.3d settlement for the item that is or
becomes final, the bank may
86, 91 (Tex.2000). Whether Chapter 4 applies is a
revoke the settlement given by it,
question of law, which we review de novo. Id. To the
charge back the amount of any
extent they do not conflict with the UCC’s provisions,
credit given for the item to its
common law principles complement the UCC. Plano
Lincoln Mercury, Inc. v. Roberts, 167 S.W.3d 616, 624 customer’s account, or obtain
(Tex.App.–Dallas 2005, no pet.). Principles of law and refund from its customer,
whether or not it is able to return
equity, including fraud and misrepresentation, supplement
the item, if by its midnight
the provisions of the UCC unless displaced by particular
UCC provisions. See TEX. BUS. & COM. CODE ANN. deadline or within a longer
reasonable time after it learns the
§ 1.103(b) (West 2009). Additionally, Official Comment
2, Section 1.103 provides further guidance as follows: facts it returns the item or sends
notification of the facts.
The Uniform Commercial Code
was drafted against the backdrop of TEX. BUS. & COM. CODE ANN. § 4.214(a). Customers
who are victims of fraudulent transactions often pursue
existing bodies of law, including
common law causes of action to avoid the bank’s right of
the common law and equity, and
chargeback as provided by the code. Melissa Waite,
relies on those bodies of law to
Check Fraud and the Common Law: At the Intersection of
supplement it [sic] provisions in
many important ways. At the same Negligence and the Uniform Commercial Code, 54
time, the Uniform Commercial B.C.L.Rev. 2205, 2224 (Nov.2013). “[The UCC] is not
clear as to whether and under what contexts common law
Code is the primary source of
claims should be allowed in check fraud scenarios
commercial law rules in areas that
it governs, and its rules represent because Articles 3 and 4 have no explicit preemption
choices made by its drafters and the provision.” Id.
enacting legislatures about the
*5 When construing a statute, we are to consider, among
appropriate policies to be furthered
other things, the object to be obtained by the legislature
in the transactions it covers.
and the circumstances under which the statute
Therefore, while principles of
wasenacted. TEX. GOV’T CODE ANN. § 311.023(1), (2)
common law and equity may
supplement provisions of the (West 2013). The UCC contains a comprehensive and
Uniform Commercial Code, they carefully considered allocation of responsibility among
may not be used to supplant its parties to a banking relationship in Texas. Sw. Bank v.
Info. Support, 149 S.W.3d 104, 107 (Tex.2004). Chapter
provisions, or the purposes and
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

4 of the UCC specifies duties and responsibilities for a related to its fraud claim, thereby defeating the Bank’s
bank in the actual check processing procedure. But, it is motion for a no evidence summary judgment on that
silent about the bank’s communications with the customer claim. ADT claims the summary judgment evidence
during the check processing procedure. The Montana shows that false representations were made intentionally
Supreme Court, in an opinion involving a similar fact and without knowledge of the truth, and ADT reasonably
pattern, determined that common law principles apply relied on the representation.
when a bank communicates with a depositor who has
inquired about the check processing procedure. See Valley
Bank of Ronan v. Hughes, 334 Mont. 335, 147 P.3d 185,
191 (2006). Elements of Fraud
[7]
A plaintiff, such as ADT, seeking to prevail on a fraud
In that case, the customer alleged that the bank had made claim must prove that (1) the defendant made a material
misrepresentations about the check settlement process. He misrepresentation; (2) the defendant knew the
then sued the bank claiming that it had inappropriately representation was false or made the representation
charged back his account after the dishonor of the recklessly without any knowledge of its truth; (3) the
deposited checks. The Montana Supreme Court reasoned defendant made the representation with the intent that the
that because such communications are not addressed with other party would act on that representation or intended to
specificity by the UCC, common law and equitable induce the party’s reliance on the representation; and (4)
principles supplement the UCC and govern the legal the plaintiff suffered an injury by actively and justifiably
rights and responsibilities that applied to the bank’s relying on that representation. Exxon Corp. v. Emerald
representations to the customer, upon which the customer Oil & Gas Co., L.C., 348 S.W.3d 194, 217 (Tex.2011).
allegedly relied. Id. The Montana Supreme Court thus
held that common law principles apply to bank
communications to a depositor inquiring about the
processing of checks. Id. at 192. Material Misrepresentation
*6 ADT claims that Bank employees Heather McDougald
[5] [6]
We are mindful that a uniform act included in a code and Laura Hill made material misrepresentations or false
shall be construed to effect its general purpose to make statements respectively to Payne and Blaase regarding
uniform the law of those states that enact it. TEX. GOV’T whether the counterfeit check had cleared. We first
CODE ANN. § 311.028 (West 2013). The UCC itself review ADT’s summary judgment evidence concerning
specifically describes fraud as a cause of action that can McDougald’s representations to Payne. In her deposition
be used to supplement its provisions. TEX. BUS. & testimony, which is part of the record before us, Payne
COM. CODE ANN. § 1.103. We therefore agree with the recounted her March 1 conversation with McDougald:
Montana Supreme Court’s holding in Valley Bank of
Ronan v. Hughes that common law fraud principles apply Q. Got it. You spoke to Ms. McDougald?
to bank communications during the check processing
A. Yes.
procedure. Accordingly, the trial court erred in granting
summary judgment on the Bank’s affirmative defense of Q. And what did you ask her? What did she tell you?
preemption as asserted against ADT’s fraud claim. See
Fernandez, 315 S.W.3d at 508. We sustain ADT’s second A. I asked her, I said, Have you heard anything yet?
issue.
Q. What did she tell you?

A. She told me no.

COMMON LAW FRAUD Q. That’s the question you asked all three of those
times, right?
In its third issue, ADT argues that the traditional summary
judgment was improperly granted because there are A. Yeah.
conflicts in the evidence creating disputed issues of fact
related to its common law fraud claim. ADT claims there Q. And then at some point, did somebody tell you,
are fact issues regarding the intention of the tellers in Hey, it’s okay?
making the representations and whether ADT relied on
the Bank’s representations. In its sixth issue, ADT A. I asked her when I was in. I made deposits on the
contends that it produced more than a scintilla of evidence 1st of March. I had three deposits that day, and so—

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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

and that was a Monday, and I asked Heather, and she deposit agreement and funds availability policy, each of
said, Let me look on the computer, and she told me these three statements made by McDougald to Payne were
then that the funds were there, and she said, it looks true. The funds were there, they were good, and ADT
like they’re good. could immediately disburse the funds.

Q. Did she say anything other than that? ADT’s purported evidence of a misrepresentation by Hill
to Blaase consists of testimony from Blaase’s deposition
A. I don’t remember. as follows:
Q. Tell me as close as you can precisely what she
A. When I walked up to the—to
said. The funds were there?
her at the teller box, I said, I
A. I did ask her, I said, Then can I disburse the want to make sure that—I need
funds? And she said, Yes. That was the other thing. to send a wire. How do I do it?
Because I haven’t done it before.
Q. You asked her, Can I disburse the funds? So she pulled this form out and
she says, Well, I need this
A. Yes. information. And I said, Well, I
think I have it all, but I want to
Q. And then she said yes. And what else—what else make sure that this check has
did she say besides yes to that question? cleared. We’ve been told that it
has, Jan had been told that it has.
A. Nothing, that I can— And she went to her computer
screen, you know, maybe 10, 15
Q. So the only thing that she said in response to your seconds, not long, and said yes,
question, Can I disburse the funds, and she said yes? and so then I handed her the slip
of paper that Trena had filled this
A. Said yes. information out, and Laura filled
all this out and asked me to print
Q. And that’s all she said?
my name, put my phone number
A. Yes, as far as my recollection, that’s what she and sign it, and she’d take care
said. of it.

Q. Okay, And do you now believe that she was in *7 [9]This testimony establishes only that Hill’s answer to
error when she said that? Blaase’s query was based on what she saw on her
computer screen. That screen would have shown the
A. I think she believed it, but evidently it wasn’t provisional credit that ADT had received when it
correct. deposited the counterfeit check pursuant to the deposit
agreement and the Bank’s funds availability policy. Hill
Q. She obviously wasn’t trying to deceive you in had the same information that McDougald had seen on
some way, was she? her screen the day before. The Bank’s computer showed
the availability of the funds and this was reported to
A. No, I don’t think she was trying to deceive me. Payne and Blaase. For a fraud claim to survive, the
[8] company agent that makes the representation must have
This evidence shows that McDougald told Payne “the the requisite mental state; that is, as relevant here, she
funds were there.” Then she said, “It looks like they are must know that the statement was false. Landers v.
good.” Payne further testified that McDougald told her Aurora Loan Servs., LLC, 434 S.W.3d 291, 296
that she could disburse the funds. The deposit agreement (Tex.App.–Texarkana 2014, no pet.). There is nothing in
provides that, in accepting items for deposit, the Bank the record before us that shows either McDougald or Hill
assumes no responsibilities beyond the exercise of had any knowledge that the information they gave to
ordinary care. Further, the agreement provides that all Payne or Blaase was false.
checks credited to an account are subject to receipt of the
proceeds of final payment by the Bank. The Bank’s policy
is to make funds from the depositor’s cash and check
deposits available to the depositor on the first business Knowing or Reckless Misrepresentation
day after the day it receives the deposit. Thus, under the
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

[10] [11]
To establish fraud, ADT was required to produce justifiability, we must inquire whether, given a fraud
evidence that McDougald and Hill knew their statements plaintiff’s individual characteristics, abilities, and
were false or made recklessly without knowledge of the appreciation of facts and circumstances at or before the
truth. See Johnson & Higgins of Tex., Inc. v. Kenneco time of the alleged fraud, it is extremely unlikely that
Energy, Inc., 962 S.W.2d 507, 526 (Tex.1998). A speaker there is actual reliance on the plaintiff’s part. Grant
acts recklessly if he makes representations “about any Thornton LLP v. Prospect High Income Fund, 314
knowledge of the truth and as a positive assertion.” Id. at S.W.3d 913, 923 (Tex.2010). Moreover, a person may not
527. As shown in the paragraphs above, when they spoke justifiably rely on a representation if there are “red flags”
to Payne and Blaase, McDougald and Hill focused on the indicating such reliance is unwarranted. Id.
availability of the funds to ADT, as reflected by the
Bank’s computerized records. Payne and Blaase, *8 The red flags for ADT appeared in the first
however, were attempting to determine if the counterfeit communication with Lopez and never stopped. Lopez
check had cleared. ADT’s president and vice president identified himself as a chief financial officer of a Chinese
interpreted the communication differently from the company. Yet, his numbers in his communications with
Bank’s employees. Fraud requires proof of an affirmative ADT were never consistent. He said his “stock broker”
misrepresentation, not simply a misunderstanding. See was sending “a payment of $105,000.00USD
Orion Ref. Corp. v. UOP, 259 S.W.3d 749, 771–72 ($500,000.00USD).” He had his “account manager,” Mr.
(Tex.App.–Houston [1st Dist.] 2007, pet. denied); Green Sound, send a check for $35,000.00. The check
Mumphord v. First Victoria Nat’l Bank, 605 S.W.2d 701, that was sent showed a numerical amount of $35,000.00
704 (Tex.Civ.App.–Corpus Christi 1980, no writ). while the amount shown in writing was only $30,000.00.

Furthermore, the communication at issue is open to more Lopez initially said he needed “$98,000.00 for the
than one interpretation and therefore ambiguous. The purchase of Chinese home style furniture, Chinese home
legal definition of ambiguity is “[d]oubtfulness or style entertainment, Chinese home decorations, and
uncertainty of meaning or intention, as in a contractual Chinese kitchen appliances.” But then, he asked that only
term or statutory provision; indistinctness of signification, $30,000.00 be wired for the purchase of these items.
esp. by reason of doubleness of interpretation.”
BLACK’S LAW DICTIONARY 97 (10th ed.2014). The The name of the Chinese chief financial officer, Yang
ambiguous communication does not equate to knowing Hua Lopez, was unusual. “Lopez” is not of Chinese
the representation was false or made without knowledge origin. Lopez said the money would be sent by his
of its truth. Therefore, there is no evidence of this element “stockbroker in America.” The check, however, was sent
of fraud in the record before us. from Canada by a “Mr. Green Sound,” who identified
himself as an “account manager.” Further, the counterfeit
check was drawn on the Bank of Montreal by a Canadian
insurance company with the name of “AXA.”
Justifiable Reliance
[12]
To prove fraud, ADT must show that it both actually Lopez first told ADT that he wanted a house located in its
and justifiably relied upon the alleged misrepresentation city. But, when sent a list of prospective properties, he
to suffer an injury. Blaase asserted that he was relying on chose a house eighty miles away. He made this choice
what Hill viewed on her computer screen to determine only one and a half hours after he had been presented a
that the check had cleared. The record shows that he had list of the properties by ADT.
asked the Bank’s vice president and branch manager in
Gun Barrel City, Leland Pitts, on five separate occasions Lopez never signed a buyer’s representation agreement
whether the check had cleared. He was told each time by with ADT although he was asked on numerous occasions
Pitts that it had not. He had never dealt with Hill, who to do so. Further, he never signed an earnest money
was a teller at the Mabank branch of the Bank, regarding contract for the property he had selected. Finally, Lopez
this deposit. To expect her to know the background of this requested that the funds, which had been paid by a
transaction was not justifiable. Payne could not rely on Canadian insurance company and drawn on a Canadian
what McDougald told her about the funds “being there” bank, be wired to a bank in Tokyo, Japan so that he could
or “good” and that they could be disbursed to create a purchase furnishings in China for the Texas property.
justifiable belief that the check had cleared.
[15]
ADT appeared to accept all of these implausible
[13] [14]
Our supreme court has further stated that a person names, conflicting messages, inconsistent numbers,
may not justifiably rely upon a representation if there are contradictory instructions, unusual circumstances, and
“red flags” indicating reliance is unjustified. In measuring
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

absence of key documents at face value, rather than pet.). The UCC, in these relationships, contains a
probing further into these red flags to determine if this comprehensive and carefully considered allocation of
was a legitimate transaction. A fraud plaintiff cannot responsibility among parties to banking relationships. Sw.
recover if he blindly relies upon a misrepresentation, the Bank, 149 S.W.3d at 107; Martin, 29 S.W.3d at 91.
falsity of which would be patent to him if he had utilized Where the UCC applies, common law rules regarding
his opportunity to make a cursory examination or breach of contract do not apply. Roberts, 167 S.W.3d at
investigation. Field v. Mans, 516 U.S. 59, 71, 116 S.Ct. 624. Further, when the UCC applies, common law claims
437, 444, 133 L.Ed.2d 351 (1995). All of these red flags that conflict with the UCC are precluded. See Contractors
show that ADT’s alleged reliance on the Bank employees’ Source, Inc., 462 S.W.3d at 138.
statements regarding the counterfeit check was
[19]
unjustified. We hold ADT failed to establish the In a chargeback such as happened here, Section 4.214
justifiable reliance element of its fraud cause of action. of the UCC applies. TEX. BUS. & COM. CODE ANN. §
Grant Thornton, 314 S.W.3d at 923. The record indicates 4.214(a). Any cause of action that ADT had for breach of
there is no evidence of a material misrepresentation by the contract was preempted by the UCC. Roberts, 167 S.W.3d
Bank, a knowing or reckless misrepresentation by the at 624. When the Canadian check deposited by ADT was
Bank, or justifiable reliance on the Bank’s representation. determined to be counterfeit, the Bank was authorized by
Accordingly, the trial court correctly granted a summary the UCC to effectuate a chargeback. TEX. BUS. & COM.
judgment in favor of the Bank on ADT’s fraud claim. See CODE ANN. § 4.214(a). The chargeback would have also
Merriman, 407 S.W.3d at 248; Exxon Corp., 348 S.W.3d been allowed by the deposit agreement. The trial court did
at 217. We overrule ADT’s third and sixth issues. not err by granting the Bank a summary judgment on
ADT’s breach of contract claim. See Fernandez, 315
S.W.3d at 508.

OTHER CAUSES OF ACTION
Equitable Estoppel
In its fifth issue, ADT contends that the bank improperly [20]
ADT asserted that the Bank is estopped to deny that
charged back its provisional credit for the counterfeit ADT was informed the check had cleared or was good.
check in the amount of $30,000.00 and the trial court The doctrine of equitable estoppel requires (1) a false
erred in denying its alternative causes of action. ADT representation or concealment of material facts; (2) made
further asserts that the trial court erred in granting with knowledge, actual or constructive, of those facts; (3)
summary judgment in favor of the Bank on its with the intention that it should be acted upon; (4) to a
counterclaim for ADT’s breach of UCC warranties. party without knowledge or means of obtaining
knowledge of the facts; (5) who detrimentally relies on
the representations. Kenneco Energy, Inc., 962 S.W.2d at
515–16.
Breach of Contract
*9 [16] [17] [18]ADT alleged that the Bank’s withdrawal of [21] [22]
The first element of equitable estoppel required a
funds from ADT’s account was a breach of the deposit false statement to ADT by McDougald or Hill. When
agreement and the Bank breached its common law duty to McDougald and Hill respectively spoke to Payne and
perform. The relationship of a bank to a general depositor Blaase, they were focused on whether the funds were in
is contractual, that of debtor-creditor arising from the ADT’s account. The uncontroverted evidence is that the
depository contract. Trevino & Assocs. Mech., L.P. v. funds were in ADT’s account due to the provisional credit
Frost Nat’l Bank, 400 S.W.3d 139, 148 (Tex. App.– Blaase had opted for. Neither McDougald nor Hill made a
Dallas 2013, no pet.). The laws of this state govern a false statement. Therefore, this defense fails. See
deposit contract between a bank and a consumer account Merriman, 407 S.W.3d at 248.
holder if the branch or separate office of the bank that
accepts the deposit contract is located in Texas. TEX.
BUS. & COM. CODE ANN. § 4.102(c). Under the laws
of this state, the UCC regulates a bank’s handling of Failure to Return Check
deposits and collections for its customers. Id. §§ 4.101– [23]
In its petition, ADT complained that its claim against
.504. The relationship may also be governed in part by the maker of the check is precluded due to the Bank’s
agreements between the bank and its customer. failure to return the alleged counterfeit check. In its brief,
Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462 ADT has not argued and analyzed its position on the
S.W.3d 128, 133 (Tex.App.–Houston [1st Dist.] 2015, no Bank’s failure to return the check. Further, it has not cited
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

any authority to support its position. Rule 38 of the Rules common law claim.1 It is not listed as a cause of action
of Appellate Procedure provides that a brief to the court that supplements the UCC. See TEX. BUS. & COM.
of appeals shall contain, among other things, “a clear and CODE ANN. § 1.103(b). Furthermore, the Bank
concise argument for the contentions made, with withdrew the $30,000.00 pursuant to Section 4.214 of the
appropriate citations to authorities in the record.” TEX. R. UCC, which gives the Bank the right to charge back the
APP. P. 38.1(i); In re B.A.B., 124 S.W.3d 417, 420 amount previously given for a dishonored item. TEX.
(Tex.App.–Dallas 2004, no pet.). The failure to BUS. & COM. CODE ANN. § 4.214. Therefore, the
adequately brief an issue, either by failing to specifically common law cause of action for money had and received
argue and analyze one’s position or provide citations to has been supplanted by Chapter 4 of the UCC. The trial
authorities, waives any error on appeal. Id. Therefore, court properly granted summary judgment in favor of the
ADT has waived any error regarding this cause of action. Bank on ADT’s claim for money had and received. See
Fernandez, 315 S.W.3d at 508.

Promissory Estoppel
[24] [25]
ADT alleged that the Bank consented to inform Negligent Misrepresentation and Conversion
ADT if the check was not good and was damaged when it ADT alleged that the Bank’s actions constituted negligent
relied on Bank employees’ statements that the check was misrepresentation and conversion. Causes of action for
good. The requisites of promissory estoppel are (1) a negligent misrepresentation and conversion must be filed
promise, (2) foreseeability of reliance thereon by the within two years from the date that they occur. If not, the
promisor, and (3) substantial reliance by the promisee to claim is barred by the statute of limitations. TEX. CIV.
his detriment. Henry Schein, Inc. v. Stromboe, 102 PRAC. & REM. CODE ANN. § 16.003 (West
S.W.3d 675, 686 n. 25 (Tex.2002). If an alleged promise Supp.2014); Tex. Am. Corp. v. Woodbridge Joint Venture,
is part of a valid contract, the promisee cannot disregard 809 S.W.2d 299, 303 (Tex.App.–Fort Worth 1991, writ
the contract and sue for reliance damages under the denied).
doctrine of promissory estoppel. BP Am. Prod. Co. v.
[30]
Zaffirini, 419 S.W.3d 485, 507 (Tex.App.–San Antonio Here, the alleged negligent misrepresentation and
2013, pet. denied). Promissory estoppel is not applicable conversion would have occurred in March 2010. ADT
to a promise covered by a valid contract between the filed its first original petition against the Bank in
parties. Id. September 2012. This was more than two years after
ADT’s cause of action would have accrued, and the
*10 [26]As explained above, there was a valid contract negligent misrepresentation and conversion causes of
between the Bank and ADT with regard to deposits and action are therefore barred by the statute of limitations.
collections. Therefore, even if this contract was not The trial court did not err in granting summary judgment
preempted by the provisions of the UCC related to in favor of the Bank on ADT’s negligent
chargeback on provisional credits, a promissory estoppel misrepresentation and conversion claims. See Fernandez,
cause of action would not have been available to ADT in 315 S.W.3d at 508.
this case. See id. The trial court did not err in granting the
Bank’s motion for summary judgment on ADT’s claim
for promissory estoppel. See Fernandez, 315 S.W.3d at
508. Deceptive Trade Practices Act
[31]
Any cause of action filed under the DTPA must be
brought within two years after discovery of the deceptive
act complained of. TEX. BUS. & COM. CODE ANN. §
Money Had and Received 17.565 (West 2011). Again, this cause of action would
[27] [28] [29]
ADT alleged that the Bank wrongfully withdrew have accrued in March 2010 and suit was not filed until
$30,000.00 from ADT’s account and it would be September 2012. ADT’s DTPA cause of action is barred
unconscionable for the Bank to retain it. To recover in a by the statute of limitations. Id. The trial court did not err
cause of action for money had and received, all a plaintiff in granting summary judgment in favor of the Bank on
need show is that the defendant holds money that in ADT’s DTPA cause of action. See Fernandez, 315
equity and good conscience belongs to the plaintiff. Staats S.W.3d at 508.
v. Miller, 150 Tex. 581, 243 S.W.2d 686, 687 (1951).
This cause of action “looks solely to the inquiry, whether
the defendant holds money which belongs to the
plaintiff.” Id. at 687–88. Money had and received is a The Bank’s Counterclaim
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American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

The Bank counterclaimed for ADT’s breach of warranties in ADT’s response to the Bank’s motion for summary
under UCC Sections 3.416 and 4.207. See TEX. BUS. & judgment. ADT argues that the depositions were not
COM. CODE ANN. §§ 3.416, 4.207 (West Supp.2014). voluminous and, in light of today’s technology, searching
Pursuant to those sections, ADT warranted that it was for words can be done electronically.
entitled to enforce the check sent by Lopez and that the
[34]
signature on the check was authentic. Id. Rulings concerning the admission or exclusion of
summary judgment evidence are reviewed under an abuse
*11 [32]ADT argues that the warranties apply only to of discretion standard. Barraza v. Eureka Co., 25 S.W.3d
checks that are deposited, not those sent for collection. 225, 228 (Tex.App.–El Paso 2000, pet. denied). A trial
The evidence shows the check at issue was deposited. court abuses its discretion if it acts without any reference
Additionally, the UCC does not make that distinction to any guiding rules or principles. Downer v. Aquamarine
regarding warranties. The UCC provides that when a Operators, Inc., 701 S.W.2d 238, 241 (Tex.1985).
person transfers an instrument for consideration, he
[35] [36] [37]
provides certain warranties. Id. An instrument is A general reference to a voluminous summary
transferred when it is delivered by a person other than its judgment record is inadequate to meet the evidentiary
issuer for the purpose of giving to the person receiving burden in a summary judgment. Ramirez v. Colonial
delivery the right to enforce the instrument. TEX. BUS. & Freight Warehouse Co., 434 S.W.3d 244, 250 (Tex.App.–
COM. CODE ANN. § 3.203 (West 2002). Houston [1st Dist.] 2014, pet. denied). An appellant has a
duty to show that the record supports its contentions.
[33]
ADT further asserts that Sections 3.416 and 4.207 Blake v. Intco Invs. of Tex., Inc., 123 S.W.3d 521, 525
apply to negotiable instruments and a counterfeit check is (Tex.App.–San Antonio 2003, no pet.). Here, ADT made
not negotiable, but only a facsimile of a negotiable reference to portions of each of the four depositions to
instrument. Again, this is not an accurate distinction. support its position on the summary judgment. However,
Classification of an item as a negotiable instrument is it attached each of the four depositions in its entirety. The
based on form. TEX. BUS. & COM. CODE ANN. § trial court should not be compelled to sift through
3.104(f) (West Supp.2014). The evidence shows that the hundreds of pages of depositions to search for evidence
check at issue was counterfeit. Therefore, ADT breached supporting a summary judgment contestant’s contentions.
its warranty that all signatures on the instrument are Guthrie v. Suiter, 934 S.W.2d 820, 826 (Tex.App.–
authentic and that it was entitled to enforce the check. See Houston [1st Dist.] 1996, no writ.). Therefore, the trial
TEX. BUS. & COM. CODE ANN. §§ 3.416, 4.207. court did not abuse its discretion by refusing to consider
Accordingly, the trial court did not err in granting the remainder of the depositions of Payne, Blaase,
summary judgment in favor of the Bank on its McDougald, and Pitts that were not specifically cited to it
counterclaim for breach of warranties under the UCC. See in ADT’s summary judgment response. We overrule
TEX. R. CIV. P. 166a(c). ADT’s first issue.

Summation
ADT has not shown error in the trial court’s ATTORNEY’S FEES
determination that the Bank is entitled to summary
judgment on each of ADT’s alternative causes of action, *12 Finally, in its fourth issue, ADT challenges the trial
its defense of equitable estoppel, or on the Bank’s court’s award of attorney’s fees to the Bank on its
counterclaim. Accordingly, we overrule ADT’s fifth counterclaim. ADT contends that attorney’s fees are not
issue. warranted because no actual damages were awarded to the
Bank, the Bank presented no claims for affirmative relief,
and the services of the Bank’s attorneys were only
defensive to ADT’s claim.
[38] [39] [40]
VOLUMINOUS RECORDS The issue of whether a party is entitled to
recover attorney’s fees is a question of law for the court to
In its first issue, ADT contends that the trial court erred in determine. Jackson Law Office, P.C. v. Chappell, 37
striking much of the deposition testimony of Janet Payne, S.W.3d 15, 23 (Tex.App.–Tyler 2000, pet. denied). A
Robert Blaase, Leland Pitts, and Heather McDougald. In party may recover attorney’s fees only as provided by
response to the Bank’s objection, the trial court struck all contract or statute. Woodhaven Partners, LTD v. Shamoun
deposition testimony that was not specifically referenced & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex.App.–

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 16
American Dream Team, Inc. v. Citizens State Bank, --- S.W.3d ---- (2015)

Dallas 2014, no pet.). Parties are free to contract for a fee claim.
recovery standard either more or less strict than Chapter
38 of the Civil Practice and Remedies Code. The Bank sought attorney’s fees pursuant to this clause in
Intercontinental Group P’ship v. K.B. Home Lone Star the deposit agreement. The parties’ agreement specifically
L.P., 295 S.W.3d 650, 653 (Tex.2009). When parties stated that the Bank would be entitled to its attorney’s
include an attorney’s fee provision in a contract, the fees if it was found not to be liable on any claim made by
language of the contract controls over the language of the ADT. Although the Bank received no damages or
statute. Peterson Group, Inc. v. PLTQ Lotus Group, L.P., affirmative relief, it was the prevailing party in this
417 S.W.3d 46, 88 (Tex.App.–Houston [1st Dist.] 2013, litigation due to the fact that it was found not to be liable
pet. denied) (Keyes, J., dissenting). Whether a party is a on the claims made against it by ADT. Id. The trial court
prevailing party is based on success on the merits, not the properly awarded the Bank its attorney’s fees. We
award or denial of damages. Robbins v. Capozzi, 100 overrule ADT’s fourth issue.
S.W.3d 18, 27 (Tex.App.–Tyler 2002, no pet.). A
prevailing party is one who is vindicated by the trial
court’s judgment. Id.
[41]
The deposit agreement between the Bank and ADT DISPOSITION
included the following clause:
We affirm the trial court’s judgment.
You also agree to pay all attorney’s
fees, costs and expenses that
financial institution may incur as a
All Citations
result of any claim or action made
against financial institution by you --- S.W.3d ----, 2015 WL 5439686
or on your behalf related to your
account where financial institution
is found not to be liable for such

Footnotes
1 At common law, this cause of action was known as assumpsit. Michol O’Connor, O’CONNOR’S TEXAS CAUSES OF
ACTION 131 (2015).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 17
 COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

JUDGMENT

SEPTEMBER 16, 2015

NO. 12-14-00117-CV

AMERICAN DREAM TEAM, INC.,
Appellant
V.
CITIZENS STATE BANK,
Appellee

Appeal from the 173rd District Court
of Henderson County, Texas (Tr.Ct.No. 2012A-0911)

THIS CAUSE came to be heard on the oral arguments, appellate record,
and briefs filed herein, and the same being considered, it is the opinion of this court that there
was no error in the judgment.
It is therefore ORDERED, ADJUDGED and DECREED that the judgment
of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
against the appellant, AMERICAN DREAM TEAM, INC., for which execution may issue, and
that this decision be certified to the court below for observance.
James T. Worthen, Chief Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.